Supplemental Assessment – Frequently Asked Questions
What are supplemental assessments?
The supplemental roll provides a mechanism for placing property subject to Proposition 13 reappraisals due to change in ownership or completed new construction into immediate effect. Changes in ownership or completed new construction are referred to as ’supplemental events’ and result in supplemental tax bills that are in addition to the annual property tax bill.
The increase (or decrease) in assessed value resulting from the reappraisal is reflected in a prorated assessment (a supplemental bill) that covers the period from the first day of the month following the supplemental event to the end of the fiscal year. A fiscal year runs from July 1 through June 30.
Supplemental assessments apply to real property (land, improvements, and fixtures and taxable possessory interests) but do not apply to personal property or any property not subject to Article XIII A (Proposition 13).
Revenue and Taxation Code sections 75–75.72 detail the laws governing the supplemental assessment process.
What happens when the county assessor reassesses my property?
When a supplemental event occurs, the county assessor determines the current market value of the portion of the property that changed ownership or that was newly constructed. The county assessor then subtracts the property’s prior assessed value from its newly assessed value, and the difference between the two is the net supplemental value that will be assessed and enrolled as a supplemental assessment. The supplemental assessment may be either a positive amount or, in the case of a reassessment that results in a value that is less than the prior assessed value, a negative amount.
If the net supplemental assessment is a positive number, the increase in taxes will be calculated by the county auditor-controller based on the change in value. One, or possibly two, supplemental tax bill(s) will be generated and mailed to you by the county tax collector. If the net supplemental assessment is a negative number (a decline in value), the auditor-controller will issue a prorated refund.
Once the new assessed value of your property has been determined, the county assessor will send you a "Notice of Supplemental Assessment." This notice will show you what the net supplemental assessment amount is and how it was calculated.Example:
|New value at date of purchase or completion of new construction:||$ 250,000|
|Prior assessed value:||- 200,000|
|Net Supplemental Assessment:||+ $50,000|
A supplemental reduction in value will not reduce (nor can it be used as a credit toward) the amount still due on the existing annual tax bill. The amount of tax shown on the original tax bill must be paid even though the assessed value of the property was reduced by the supplemental assessment.
How are supplemental taxes computed?
Supplemental bills (or refunds) are calculated based on the number of months remaining in the current fiscal year after the month in which the supplemental event occurs. A fiscal year runs from July 1 through June 30.
If a supplemental event occurs between June 1 and December 31, only one supplemental tax bill or refund check is issued. This bill or refund accounts for the property's change in value for the period between the first day of the month following the event date and the end of the current fiscal year (i.e., the following June 30). If, however, a supplemental event occurs between January 1 and May 31, two supplemental tax bills or refund checks are issued. The second bill or refund accounts for the property's change in value for the entire 12 months of the coming fiscal year, beginning on the following July 1.
The tax or refund amount resulting from a supplemental assessment becomes effective on the first day of the month following the month in which the supplemental event took place; monthly proration factors are used to calculate the taxes owed. Taxes supplemental to the current roll are computed by first multiplying the net supplemental assessment by the tax rate, and then multiplying that amount by a monthly proration factor. The proration factors are as follows:
|Tax Effective||Factor||Months Remaining|
* A supplemental event that occurs in June rolls over to July 1, the first day of the new fiscal year. As a result, there is no supplemental assessment to the current roll; however, there is a supplemental assessment to the new roll (the annual tax roll created as of the preceding January 1 lien date) that covers the full 12 months of the ensuing fiscal year beginning July 1. Therefore, a single supplemental bill or refund is issued.
Supplemental event occurs in March 2008; additional tax effective April 1, 2008:
|Annual tax increase||=||$400 ($39,000 x 1.025% tax rate, including bond debt)|
|Supplemental tax bill #1||=||$100 ($400 x .25 proration factor*)
* For remaining months April, May, and June of fiscal year July 1, 2007 to June 30, 2008
|Supplemental tax bill #2||=||$400 (For the increased taxes for the entire ensuing fiscal year, July 1, 2008 to June 30, 2009)|
Supplemental event occurs in October 2007; additional tax effective November 1, 2007:
|Annual tax increase||=||$400 ($39,000 x 1.025% tax rate, including bond debt)|
|Supplemental tax bill #1||=||$268 ($400 x .67 proration factor*)
* For the remaining eight months of fiscal year
July 1, 2007 to June 30, 2008
As the above examples illustrate, the county auditor-controller calculates the supplemental tax or refund, prorated based upon the number of months remaining in the fiscal year in which the event occurred.
What other types of properties are not subject to supplemental assessments?
- Boats are personal property which are assessed annually based on their market value on January 1.
- Fixtures, which are normally valued as a separate appraisal unit from a structure.
- Property subject to the California Land Conservation Act (Williamson Act), including improvements under contract (for example, trees and vines).
- Property subject to assessment as a restricted historical property.
- Property restricted to timberland use pursuant to subdivision (j) of Section 3 of Article XIII of the California Constitution.
- Property subject to valuation as a golf course pursuant to Section 10 of Article XIII of the California Constitution (non-profit golf courses).
- Property subject to valuation pursuant to Section 11 of Article XIII of the California Constitution (municipally owned property located outside the boundaries of the municipality).
- State-assessed property.
Can I file an appeal of a supplemental assessment?
Yes. Appeals of supplemental assessments must be filed with the local assessment appeals board within 60 days of the mailing date shown on the supplemental tax notice or bill (or the date on the refund check) you receive. If you believe a supplemental assessment is incorrect, you should discuss the assessment with the assessor's staff as soon as possible after receiving your "Notice of Supplemental Assessment" or supplemental tax bill (if you did not receive a notice). It is possible that the assessment might be corrected without an assessment appeal hearing if you can provide the county assessor with convincing evidence that the assessment was incorrect.
If you are unable to resolve the issue with the county assessor and choose to appeal your assessment, you must still pay in full the tax installments due on any existing tax bills by the appropriate deadlines; otherwise, you will incur penalties while the case is in the appeals process. Filing an appeal does not suspend the payment of any property taxes due on the assessment under appeal.
If the assessment appeals board grants a reduction in value, a refund will be issued at some point after the appeals board transmits its decision to the county auditor. In any case, it is important to understand that the filing of an appeal does not excuse the property owner from paying any taxes due on the assessment under dispute.
If an improvement is totally removed from the land, would there be a negative supplemental assessment and refund issued?
The taxable value of the totally removed improvement would be deducted from the total taxable value of the property as of the removal date. Depending upon the removed improvement, a negative supplemental assessment may be generated and a refund issued.
Please explain how I could have received six supplemental tax bills.
In situations where a series of supplemental events take place over time, it is possible to receive numerous supplemental tax bills. For example, if you completed a pool in March, two supplemental tax bills are generated. Then in April, a garage is added — that generates two more supplemental tax bills. Then, in May, you add an enclosed patio, generating two more supplemental tax bills. As a result of all these supplemental events, you would have six supplemental tax bills to pay in addition to your annual property tax bill.
However, please note that for any given tax year, no matter how many supplemental tax bills you receive for that year in addition to the annual property tax bill, the amount of the property tax portion of all those bills cannot add up to more than what the taxes would have been if the full assessment had been reflected on the annual bill from the beginning, and it usually will be somewhat less than that amount.
I purchased a home in February 2008 from an owner who had just purchased it five months earlier in September 2007. I actually received a negative supplemental tax bill for the difference in market value for the four months from the time I bought it until June 30, 2008, but I also received a supplemental bill that was issued to the previous owner! Why am I responsible for his bill?
The purchase of the same property by more than one buyer during the same fiscal year may generate multiple supplemental tax bills. If the supplemental assessment for the previous change in ownership had not been issued when you, as the second buyer, acquired the property, then the county assessor will prorate the supplemental tax bill for that previous event between you and the prior owner.
Example: Say the previous owner purchased the property on September 5, 2007, for $250,000. At that time, the assessed value of the property was $200,000. If no other supplemental events occur, the previous owner would later receive a supplemental assessment of $50,000 (the difference between the $200,000 roll value and the $250,000 market value at the time of purchase) and the increased tax would be $500 (1% tax rate x $50,000). However, since the supplemental tax bill covers only the nine months remaining in the fiscal year after the purchase (October 1, 2007 to June 30, 2008), the tax for that increase would be 9/12ths of $500, or $375.
You subsequently purchased the property during the same fiscal year on February 20, 2008, for, say, $240,000, and before the supplemental bill for the prior owner's purchase of $250,000 had been issued. Under this circumstance, you will receive a negative supplemental tax bill and a regular supplemental tax bill.
The first supplemental tax bill will be for the difference between your purchase price of $240,000 and the previous owner's September 2007 purchase price of $250,000. Your first supplemental assessment will result in a negative assessed value of $10,000, and the tax refund would be 4/12ths of a $100, or $33.34.
Your second supplemental tax bill will be for your pro-rata share of the $375 supplemental tax generated when the prior owner purchased the property back in September 2007. This will be based on the number of days of ownership you held the property during the current fiscal year. The prior owner owned it for 168 days (the number of days between September 5 and February 20). The prior owner's pro-rata supplemental bill will be 168/365ths of $375 (roughly $173), and your pro-rata bill will be 131/365ths of the $375. Your second supplemental bill in this instance would be about $135.
Thus, you will receive a supplemental refund of approximately $33, and a supplemental tax bill in the amount of $135, while the prior owner will receive a single tax bill in the amount of $173.
Many people dislike pro-rata bills because they feel that they are being unfairly taxed; however, the pro-ration really covers the period of time they actually possess the property, and thus, is not unfair.
I received a supplemental tax bill in September. Will I still receive the annual tax bill within the next few months?
Yes. The supplemental tax bill is sent in addition to the regular annual tax bill and both must be paid as specified on the bill.
If I pay property taxes through an impound account with my mortgage payment, will my lender get my supplemental tax bill?
No. Unlike the annual tax bill, lending agencies do not receive the original or a copy of the supplemental tax bill even if they are otherwise being sent and are paying the owner's annual tax bills. Instead, supplemental bills are sent directly to the property owner as stipulated by law. When you receive a supplemental tax bill, we recommend that you either pay the bill or contact your lender to discuss who should pay the bill.
It is important to understand that if the supplemental tax payment is not made before the delinquency date of the bill due to a misunderstanding between yourself and your lender, the penalties cannot be excused. State law stipulates that this is not an acceptable reason for excusing penalties.
Lately I have had difficulty making ends meet financially. Can I make a partial payment on the second installment of my supplemental tax bill?
No. If the full amount of each installment is not paid in full, you will be notified of the required additional amount and the date the balance is due. If you do not respond by that due date, your original underpayment will be refunded to you and appropriate penalties and fees will be added to your tax bill thereafter.
I just purchased my first home. Am I entitled to a homeowners' exemption on my supplemental tax bill?
If the property you acquired was not already receiving the homeowners' exemption and the property will be your principal place of residence, you may be eligible to receive the homeowners' exemption on a supplemental tax bill as long as you occupy the home as your principal residence within 90 days of the purchase date. The entire $7,000 exemption amount will be granted, but it will be prorated from the date of purchase through June 30.
If your newly purchased home is already receiving the full homeowners' exemption for the current year, however, there will be no additional exemption granted for the supplemental assessment. Your new application for the exemption will then take effect for the next fiscal year.
Please note that an exemption cannot be applied to a negative supplemental assessment.
Example: On December 29, 2007, you purchased a home for which no homeowners' exemption had been allowed. Because you are reassessed on the first day of the month following an ownership change, you will pay supplemental taxes for the six remaining months for the current fiscal year (January 1, 2008 to June 30, 2008). Assuming that your 2007-2008 supplemental assessment is in the amount of $20,000 and you file for and qualify for a homeowners' exemption, the entire $7,000 exemption would be deducted from the supplemental assessment amount before the taxes are calculated and then will be prorated as follows:
Net supplemental assessment minus homeowners' exemption times the tax rate times the proration factor for January = supplemental tax due:
$20,000 − $7,000 = $13,000
$13,000 × 1% = $130
$130 × .50 = $65 (supplemental tax due)
Are other exemptions available for supplemental assessments?
Yes. Supplemental assessments are eligible for the same property tax exemptions and assistance programs as are annual assessments. In addition to the homeowners' exemption, the disabled veterans' exemption, church exemption, welfare exemption, etc., are applicable. However, only one exemption per property may be granted per year.
I missed the 30-day filing period for the homeowners' exemption on my supplemental assessment. Can I still receive the exemption for this year?
Yes, however, you will not be granted the full amount of the exemption. If you file on or before the date on which the first installment of taxes on the supplemental tax bill becomes delinquent, you will be allowed 80 percent of the amount of the exemption ($5600). After that date, the homeowners' exemption is not available on the supplemental tax bill.
Check your supplemental tax bill for the date on which the first installment of taxes on the supplemental tax bill becomes delinquent, as the date will vary depending on when the bill was mailed by the tax collector.
I still have questions on supplemental assessments. Who can I call?
If you have further questions, you may find answers in Letters To Assessors (LTA) by searching under the "Supplemental Assessment" topic in the Accumulative Index of Letters to Assessors. The index will direct you to a specific LTA on a subtopic. You may also call the Board's Assessment Services Unit at 916-274-3350.