Supplemental Property Taxes EXPLAINED!
Are you wondering what a Supplemental Property Taxes Bill is? This blog is all about supplemental property tax bill so you're not surprised when you get one in the mail.
I know it's a super sexy topic to be talking about, but hey, it's really important because it can become a big surprise when you get a bill for several thousand dollars, about six months after you buy the house.
What is a Supplemental Property Tax Bill in San Diego County
When you go and purchase a home, there is escrow, of course, that occurs and they are going to estimate your property taxes. The seller will have paid property taxes through a part of the fiscal year, potentially all of the fiscal year, depending on where you fell. There are two payments that are typically made for property taxes here in San Diego.
Depending on when you purchase the home, then that's going to dictate how much was paid by the seller, and how much is going to have to be paid by you. That's going to be worked out in escrow as far as who owes exactly how much.
There might be credits back to the seller. Typically there's there may be credits back to the seller and you might have to pay some property taxes through escrow when purchasing. The thing is, is those property taxes are based on when that seller purchased the home originally.
This is where the supplemental property tax bills come in, because here's what happens: let's just say that you are purchasing a home for $1 million. And that home was previously purchased for $600,000 by the prior owner of say 10 years ago. There is a spread of $400,000 that has to be taken care of, and that's not taken care of in the escrow account.
Escrow is figuring everything out based on the property taxes, based on the prior purchase price and any sort of increments that went up from there. We're talking about a $400,000 spread. What happens is in 6-9months, the county will, once they get caught up and do their reassessment based on the new purchase price of the home and remember, in California, Prop 13 limits property tax to 1% of the purchase price of the home, plus any little local bonds and that sort of thing.
In the city of San Diego, we're sitting right around 1.2% property tax right now, but for easy math, we're going to use 1%. $400,000; $1 million minus $600,000 is $400,000 and 1% tax is owed on that. That is going to be $4,000 that is owed when the county comes around and issues you a supplemental tax bill.
However, depending on when you bought the home in the fiscal year, the county tax assessor is going to prorate the amount you based on that. If you bought it, say one quarter through the fiscal year and there's 9 months remaining, let's say you bought it in September, there's actually 9 months remaining in the fiscal year because it closes in June.
Then you only have to pay 3 quarters of that property tax bill. It is prorated. They're going to multiply the $4,000 by 0.75. You're going to owe $3,000. If you bought a halfway through the fiscal year, they're going to prorate it by 50%. You're going to owe 50% of that tax year and that's going to be $2,000. That just depends on where you bought it in the fiscal year.
In summary, a supplemental tax bill is the difference between your purchase price and the original owners purchase price that you bought it from about $400,000 spread, let's say multiply it by 1% times the proration where you bought it in the fiscal year, halfway through 50%. Here we go: 1% of $400,000 is $4,000 owed. Halfway through the fiscal year, $2,000 owed.
This is only a one time payment. Going forward the property taxes are figured based on what you paid for the home.It's only a one-time payment, typically 6-9 months after you purchased the home. You need the budget and plan for that so you're not caught surprised.
Sometimes when you are paying into an impound account, you can actually kind of get a pleasant surprise and find out that you actually are owed money back. I recently just had a friend where this occurred and he got a check for $5,000 and was notified that his tax bill was actually dropping by about $400 a month because he way over estimated the amount of taxes owed.
Curtis Chism, Realtor
858-281-2568 | Mobile
mailto:info@sandiegohomes.io
Chism Team | DRE #02105113
brokered by eXp Realty | DRE #01878277
Categories
Recent Posts