What is a Supplemental Tax Bill? 3 things you need to know
Throw it away!? What is a supplemental Tax bill – 3 things you need to know!
If you are thinking about buying a home and researching closing costs, or maybe you're already under contract to purchase a new home, and you're wondering how costs are gonna shake out at the closing table, or maybe you just closed on a home and you got a supplemental tax bill in the mail. If you're wondering, what is this? Do I need to pay it? ….I thought my taxes were paid by the mortgage company. YIKES, What's going on? Keep reading till the end, I'm gonna give you a tip on how to save money on your property taxes.
Are you wondering how the property taxes get handled at the closing table? Let’s break this down into 3 key points:
- What is the property tax cycle/fiscal year in Contra Costa County and Alameda County? It may vary for different county counties, but we're going to focus on those two counties right now. property taxes in cons Costa and Alameda County come out in fall. The fiscal year goes from July 1st to June 30th. The tax bill has two different payments. The first installment of payments is due November 1st and it's late on December 10th. Now that tax bill covers you from July 1st to December 31st. The second bill is due on February 1st and is considered late on April 10th. Now that tax bill covers you from January 1st until June 30th, the end of the fiscal year. One way to remember this is NO DARN FOOLING AROUND >> November, December, February, April
- How is a supplemental tax bill calculated? This calculation will determine the amount of taxes that are due to the increase in value from when the new buyer purchases the home, till the end of the fiscal year, the assessor's office then calculates the difference between the new value and the old value. The new value is set at the time of purchase. The old value is set as of January 1st of the previous fiscal year. Once you subtract those out, you get the supplemental assessed value to create your supplemental tax bill. Usually, this will create an increase in taxes which could create one or maybe even more supplemental tax bills that get mailed to you, at your new home
- Do you have to pay this tax bill? I get asked this question all the time >> If I have a supplemental tax bill, do I still have to pay my property tax bill? Is this in lieu of, or in addition to my tax bill? Well, first off you should know, your supplemental tax bill will always get mailed to you at your home address. Even if you have an impound account for your property taxes, it will not be mailed to your mortgage company. This supplemental tax bill will only get mailed to you at your home, so you need to have your eyes open! Check your mail and pay that supplemental tax bill before it’s due date. This payment is in addition to your property taxes, the supplemental tax bill will follow the same delinquency schedule as property taxes (noted above). This is unless it's in a situation where it gets mailed out between November 1st and June 30th, in which case you just have to look on the tax bill to see exactly when it's due.
The supplemental tax bill is the tax bill that covers the difference in assessed value between when the new owner purchases the property and its new market value to the end of the fiscal year. Keep in mind this supplemental tax bill gets mailed to your home and NOT to the mortgage company. Even if you have an impound account and finally, there could be more than one supplemental tax bill. So be on the lookout.
BONUS: If you want to save money on your property taxes, consider filing a homeowner's exemption. After you move into your new home, a few months later, the county will send you an application for your homeowner's exemption. A homeowner's exemption will allow you to take $7,000 off the assessed value of your home. It could be a difference of about $70 a year. I know it's not a lot. But, it's something. You could buy a nice bottle of wine or pocket that $70 and put it away for a “rainy day”. We don't have many of those though……. So then I often get asked if I get a homeowner's exemption. Can I apply my homeowner's exemption to the supplemental tax bill? Well, yes and no. It really depends on whether or not the previous homeowner had a homeowner's exemption. If they did not have a homeowner's exemption, you can apply a homeowner's exemption to your supplemental tax bill. But, if they already had a homeowners exemption, then it's already cooked in there. So no, you can't get another exemption.
When it comes to property taxes, remember NO DARN FOOLING AROUND.