|On July 1, 1983, California State law was changed to require the reassessment of property as of the first day of the month following an ownership change or the completion of new construction. In most cases, this reassessment results in one or possibly two supplemental tax bills being sent to the property owner in addition to the annual property tax bill.|
Typically, new construction is any substantial addition to real property (e.g. adding a new room, pool, or garage) or any substantial alteration which restores a building, room, or other improvement to the equivalent of new (e.g. completely renovating an outdated kitchen).
Most changes in ownership caused by the sale of property result in reassessment. However, interspousal transfers, the transfer, sale, or inheritance of property between parents and their children, and the addition of joint tenants do not result in the reappraisal of property.
The Assessor first determines the new value of the property based on current market values. The Assessor then calculates the difference between the new value and the old value (set on January 1st of the previous fiscal year).The result is the supplemental assessment value. Once the new assessed value of the property has been determined, the Assessor will send a notification of the amount.
This reassessment usually results in an increase in property value, in which case the supplemental taxes will be calculated by the Auditor-Controller based on the change in value, and one or possibly two supplemental tax bills will be created and mailed to you by the Tax Collector.
You are only taxed on the supplemental value for the portion of the current fiscal year remaining after you purchased the property or completed new construction.
Because property is assessed each January 1st for the upcoming fiscal year (July 1 through June 30), you will receive one supplemental bill if the change in property value due to ownership change or new construction is effective on the tax roll between June 1st and December 31st; you will receive two supplemental bills if the change in property value is effective on the tax roll between January 1st and May 31st.
The supplemental tax bill is sent in addition to the annual tax bill and BOTH must be paid as specified on the bill. Unlike the annual tax bill, lending agencies do not receive a copy of the supplemental tax bill. When you receive a supplemental tax bill, you must contact your lender to determine who will pay the bill.
The supplemental tax bill provides the following information:
This date is used to prorate the tax for the period remaining in the current fiscal year for which the bill was issued.
- The owner or new owner as of the date of ownership change.
- The fiscal year for which the taxes are assessed.
- The sites address if the property has improvements.
- The old and the new assessed value and the difference (i.e., the net value) upon which the tax is computed.
- The type and amount of any exemptions.
- The total amount of taxes due based upon the net increase in value.
- The effective date of the ownership change or the completion of construction.
The date on which supplemental bills become delinquent varies depending upon when they are mailed by the Tax collector. The delinquent dates are noted on the stubs of the bill. Penalties of 10% are added to any installment which is not paid on time, and an additional $10 charge is added to a late second installment.
If your supplemental tax bill is not paid by the June 30th after the second installment becomes delinquent, the property becomes tax defaulted (even if you have paid your annual tax bill). At the end of the fifth year of delinquency the property becomes subject to the power of sale.