03 May Supplemental Taxes
What Is a Supplemental Tax Bill?
San Diego County issues supplemental tax bills whenever a property changes ownership and the sale price is higher than what it previously sold for or was valued at by the county.
The supplemental tax bill reflects the increase in the property’s value from the day your transaction closes through the fiscal year’s end, June 30th.
Why Did I Receive a Supplemental Tax Bill?
When a property is sold, the Assessor’s Office is responsible for reevaluating its value and adjusting the property taxes accordingly. Assuming the property’s value has increased, the reevaluation will lead to a higher property value and tax bill.
However, since property taxes are assessed based on the property’s value as of January 1st of each year, there may be a delay between the change in ownership and the reassessment.
As a result, you may have been paying property taxes based on the previous assessed value and may owe additional property taxes for the period that was under-assessed.
The supplemental tax bill is issued to collect the additional property taxes owed for this period. The bill will include a prorated amount for the current fiscal year and will cover the period from the change in ownership to the end of the fiscal year (June 30th). The bill will also include any penalties and interest for late payment.
What Qualifies as a Change of Ownership?
The law defines changes in ownership as a transfer or sale of property. However, certain property transfers aren’t subject to revaluation, including:
- Interspousal transfers
- Having new joint tenants
- Inheriting, selling, or transferring properties between parents and their children or grandchildren. In these cases, you’ll have to consult the Assessor for approval.
- Transfers between registered domestic or common-law partners.
What Happens During the Reassessment of My Property?
During the reevaluation, the Assessor will take the previous assessed value and replace it with the new assessed value which is the amount that the property sold for at the time of the ownership change. They will prorate the tax amount based on the date of closing and deliver a Notice of Supplemental Assessment that shows the net supplemental assessment and new assessed values. This is typically a one time tax bill, but keep in mind that if you close on your property anytime between Jan. 1 to May 31st then you will expect to receive two supplemental tax bills. The reason for this is to catch you up on the current fiscal year and the coming fiscal year. Reminder, these are separate from your annual tax bills that were most likely generated on the older value.
How Are Supplemental Taxes Computed?
To calculate the tax difference, the Assessor subtracts your property’s old value from the new market value/sold price. Then, they prorate that tax difference based on the months left in the current fiscal year. Lastly, they add a 1% tax rate to your supplemental tax total.
When Should I Pay for the Supplemental Taxes?
Bill payments are found on your tax bills. You might incur penalties if you don’t settle your dues during the deadlines specified on your tax bills. You can contact the Assessor’s Office for further information and details of when your bills are due.
Assessor Office website: https://www.sdttc.com/content/ttc/en/tax-collection/supplemental-taxes.html