California State law requires the reassessment of secured 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 sometimes two supplemental property tax bills in addition to the annual secured property tax bill.
Understanding Supplemental Property Tax
After a change in ownership or when new construction is completed, the Office of the Assessor/Recorder must determine a new base year value for the property. The new value is determined usually by the current market value of the property. Once the new value is determined, the Office of the Assessor/Recorder will send you notification of the new assessed amount.
Once the Assessor's notice is sent, a supplemental tax bill is issued to you. The supplemental tax bill calculates the tax due on the supplemental assessment. The supplemental assessment is the difference between the new value (set at the time of purchase or completion of new construction) and the old assessed value (set on January 1 of the previous fiscal year).
Example:
New value at date of purchase or completion of new construction: $600,000
-Assessed value for current fiscal year (assessed value for previous owner or
assessed value before any new construction) $400,000
Supplemental assessment value: $200,000
A new property owner may receive one or two (sometimes three) supplemental tax bills depending on the date of purchase or completion date of new construction. It is dependent on when the Assessor's roll closes for the year. Please contact the Office of the Assessor/Recorder for more information on the roll dates.
For questions about your supplemental assessment value, contact the Office of the Assessor/Recorder at (415) 554-5596.
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.
How were changes in property value due to sale of property or new construction taxed in the past?
What do you mean by new construction or change of ownership?
What happens when the Office of the Assessor/Recorder reassesses my property?
Do I have the same right to appeal the Office of the Assessor/Recorder's supplemental assessed value as I do the annual assessed value?
If I receive a supplemental tax bill, will I also receive an annual tax bill in October of each year?
If I pay my property taxes through an impound account (i.e., with my mortgage payment), will my lender get my supplemental tax bill?
What does the supplemental tax bill tell me?
What if I purchase a piece of property and then sell it again after a few months?
When I purchase property or complete construction at some point during the fiscal year, will I be taxed on the supplemental value for the entire fiscal year?
Will I receive more than one supplemental tax bill?
When do supplemental tax bills have to be paid?
If payment of the supplemental tax bill is not made before the delinquency date because of a misunderstanding between my lender and myself, may I have the penalties excused?
What happens if I fail to pay my supplemental tax bill?
Can delinquent supplemental taxes be paid on an installment plan?
Are other exemptions and assistance programs available that will help defray the amount of supplemental taxes due?
How were changes in property value due to sale of property or new construction taxed in the past?
Before July 1983, the Office of the Assessor/Recorder reassessed property just once each year on March 1 for taxes due the following fiscal year (July 1- June 30). Any change in property value resulting from a change in ownership or the completion of new construction that took place after March 1 was not reevaluated and taxed until the following year.
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What do you mean by new construction or change of ownership?
Typically, new construction is any substantial addition to real
property (e.g., adding a new room, pool, or garage) or any substantial
alteration that 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 or transfer of property result in reassessment.
There are some limited exceptions. Please contact the Office of the Assessor/Recorder for details.
For further information or claim forms, please contact the Office of the Assessor/Recorder at (415) 554-5596.
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What happens when the Office of the Assessor/Recorder reassesses my property?
The Office of the Assessor/Recorder first determines the new value
of the property based on current market values. The Office of the
Assessor/Recorder then calculates the difference between the new value
(set at the time of purchase or completion of new construction) and the
old value (set on January 1 of the previous fiscal year). The result is
the supplemental assessment value. Once the new assessed value of your
property has been determined, the Office of the Assessor/Recorder will
send you a notification of the amount.
Example:
New value at date of purchase or completion of new construction $600,000
Assessed value for current fiscal year $400,000
Supplemental assessment value will be $200,000
This reassessment usually results in an increase in property value,
in which case your supplemental taxes will be calculated based on the
change in value, and one or two (sometimes three) supplemental tax
bills will be created and mailed to you by the Office of the Treasurer
& Tax Collector.
However, in some instances the reassessment results in a reduction
in value, in which case a refund will be prepared and mailed to you. A
reduction in value will not reduce the amount due on the annual tax
bill. The annual tax bill must be paid in the amount originally billed
by the deadline to avoid any penalties.
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Do I have the same right to appeal the Office
of the Assessor/Recorder's supplemental assessed value as I do the
annual assessed value?
Yes. You may contact the Office of the
Assessor/Recorder to see if the assessed value can be reassessed.
Additionally, you may contact the Assessment Appeals Board for
the purpose of resolving valuation disagreements in connection with
supplemental tax bills. Please note, there is a deadline for when applications to appeal must be filed, please check with the Assessment Appeals Board for further information.
If you choose to appeal your assessment, you must pay your tax
installments in full by the appropriate deadlines; otherwise, you may
incur penalties while the case is on appeal. If your appeal is granted,
a refund will be issued to you.
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If I receive a supplemental tax bill, will I also receive an annual tax bill in October of each year?
Yes. The supplemental tax bill is sent in addition to the annual tax
bill and both must be paid as specified on the bill. For information on
the annual tax bill, see Understanding Property Tax.
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If I pay my property taxes through an impound account (i.e., with my mortgage payment), will my lender get my
supplemental tax bill?
No. 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.
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What does the supplemental tax bill tell me?
The supplemental tax bill provides the following information:
The owner (or new owner as of the date of ownership change).
The fiscal year for which the taxes are assessed.
The location and legal description of the property.
The old and the new assessed value and the difference (net supplemental assessment) upon which the tax is computed.
The type and amount of any exemptions (e.g., homeowner's).
The total amount of taxes due based upon the net increase in value.
The date of ownership change or completion of new construction. This
date is used to prorate the tax for the period remaining in the current
fiscal year for which the bill was issued.
The bill may be paid in two installments and provides payment stubs
for each installment, which show the amount due and the date that the
amount must be paid to avoid penalties for late payment.
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What if I purchase a piece of property and then sell it again after a few months?
If you purchase and then sell property within a short period of
time, the supplemental tax bill you receive should cover only those
months during which you owned the property, and the new owner should
receive a separate supplemental tax bill. Because of the large number
of parcels and frequency of property changing hands in the City and
County of San Francisco, there are often delays in placing new
assessments on the roll. Be sure to check the dates used to prorate the
bill to ensure that the period covered is the period during which you
actually owned the property. If you receive an incorrect tax bill,
contact the Office of the Assessor/Recorder at (415) 554-5596.
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When I purchase property or complete
construction at some point during the fiscal year, will I be taxed on
the supplemental value for the entire fiscal year?
No. You are taxed only on the supplemental value for the portion of
the current fiscal year remaining after you purchased the property or
completed new construction. However, if the reassessment was not
recorded by the Office of the Assessor/Recorder before January 1, you
will receive an additional supplemental tax bill for the next fiscal
year.
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Will I receive more than one supplemental tax bill?
Yes, It is possible to receive more than one supplemental tax bill,
depending on when the ownership change or completion of new
construction occurred and when the Office of the Assessor/Recorder
recorded the new value on the tax roll.
Because property is assessed each January 1 for the upcoming fiscal
year (July 1- June 30), you will receive one supplemental bill if the
change in property value due to ownership change or new construction is
recorded on the tax roll between June 1 and December 31; you will
receive two supplemental bills if the change in property value is
recorded on the tax roll between January 1 and May 31.
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When do supplemental tax bills have to be paid?
The date on which supplemental tax bills become delinquent varies
depending upon when they are mailed by the Office of the Treasurer
& Tax Collector. If the bill is mailed between July 1 and October
30, the taxes become delinquent at 5 p.m. on December 10 for the first
installment and 5 p.m. on April 10 for the second installment (the same
delinquency schedule as for annual tax bills mailed in November).
If the bill is mailed between November 1 and June 30, the
delinquency dates - which are printed on the bill - are determined as
follows: The first installment is delinquent at 5 p.m. on the last day
of the month following the month the bill was mailed; the second
installment is delinquent at 5 p.m. on the last day of the fourth month
after the first installment delinquency date.
Penalties of 10% are added to any installment which is not paid on
time, and an additional $45 charge is added to a late second
installment.
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If payment of the supplemental tax bill is
not made before the delinquency date because of a misunderstanding
between my lender and myself, may I have the penalties excused?
No. State law stipulates that this is not an acceptable reason for excusing penalties.
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What happens if I fail to pay my supplemental tax bill?
The same rules apply as for unpaid annual tax bills. If your
supplemental tax bill is not paid by June 30, the property becomes tax
defaulted (even if you have paid your annual secured property tax
bill). If the second installment of supplemental tax becomes tax
defaulted at 5 PM on June 30th, that supplemental bill
cannot cause the property to be declared tax defaulted until the end of
the following fiscal year. At the end of the fifth year of delinquency
the property becomes subject to the power of sale as described in our
pamphlet on delinquent property taxes.
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Can delinquent supplemental taxes be paid on an installment plan?
Yes. Delinquent supplemental taxes can be paid on an installment plan in the same manner as your annual property taxes. See Delinquent Property Tax for more information.
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Are other exemptions and assistance programs available that will help defray the amount of supplemental taxes due?
Yes. Supplemental taxes are eligible for the same property tax
exemptions and assistance programs as your annual taxes. In addition to
the homeowner's exemption, you can apply through the Office of the
Assessor/Recorder for a number of other assessment exemptions (e.g.,
veteran's, church, and welfare) that result in savings. You must,
however, file for all exemptions before the 30th day following the date
of the notice from the Office of the Assessor/Recorder of your
supplemental assessment. For further information, contact the Office of
the Assessor/Recorder, Exemption Services at (415) 554-5596.
In addition, the State of California administers programs that
provide property tax assistance and postponement of property taxes to
qualified homeowners and renters who are 62 and older, blind, or
disabled. For information on the State's Homeowner or Renter Assistance
Program, call (800) 868-4171. For information on the Property Tax
Postponement Program, call (800) 952-5661.
