Alert from California State Board of Equalization
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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.
Revenue and Taxation Code sections 75–75.72 detail the laws governing the supplemental assessment process.
|Subject to Supplemental Assessments||Not Subject to Supplemental Assessments|
|Real property subject to Article XIII A (Proposition 13)
||Personal property or any real property not subject to Article XIII A (Proposition 13)
When a supplemental event occurs, the county assessor determines the current market value of the property that changed ownership or that was newly constructed. The 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 is less than the prior assessed value, a negative amount.
If the net supplemental assessment is positive, 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 by the county tax collector. If the net supplemental assessment is negative (a reduction in value), the auditor-controller will issue one, or possibly two, supplemental refund(s).
Once the new assessed value of your property has been determined, the county assessor will send a "Notice of Supplemental Assessment." This notice will show what the net supplemental assessment amount is and how it was calculated.
|New value at date of purchase or completion of new construction:||$ 250,000|
|Less Prior Assessed Value:||(200,000)|
|Equals 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 an existing annual tax bill. The amount of tax shown on the existing annual tax bill must be paid even if the assessed value of the property was reduced by a supplemental assessment.
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 refunds 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.
|Tax Year/Fiscal Year||2017/2018||2018/2019||2019/2020||2020/2021|
|Supps||Two Supplemental Bills||One Supplemental Bill||Two Supplemental Bills||One Supplemental Bill||Two Supplemental Bills||One Supplemental Bill|
The diagram above illustrates the supplemental billing cycle.
A supplemental event in March 2018 (event month 3) occurs in Calendar Year 2018 and Fiscal Year 2017-2018 and generates two supplemental bills (or refunds) – one for the remainder of Fiscal Year 2017-2018 and a second for the entirety of Fiscal Year 2018-2019.
A supplemental event in September 2018 (event month 9) occurs in Calendar Year 2018 and Fiscal Year 2018-2019 and generates a single supplemental bill (or refund) for the remainder of Fiscal Year 2018-2019. The annual assessment for 2019 (pertaining to Fiscal Year 2019-2020) will also reflect the change.
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.
|Tax Effective||Months Remaining in Fiscal Year||Factor|
* 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.
The examples below illustrate how 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.
For any additional information regarding Supplemental Assessment calculation and notification, please contact your local county assessor's office
$39,000 ($300,000 current market value - $261,000 prior assessed value)
|Annual tax increase||
$400 ($39,000 x 1.025% tax rate, including bond debt*)
|Supplemental tax bill #1||
$100 ($400 x .25 proration factor*)
|Supplemental tax bill #2||
$400 (For the increased taxes for the entire ensuing fiscal year, July 1, 2008 to June 30, 2009)
$39,000 (value of new construction to be added to existing roll value)
|Annual tax increase||
$400 ($39,000 x 1.025% tax rate, including bond debt*)
|Supplemental tax bill #1||
$268 ($400 x .67 proration factor*)
$50,000 ($300,000 prior assessed value - $250,000 current market value)
|Annual tax decrease||
$513 ($50,000 x 1.025% tax rate, including bond debt*)
|Negative supplemental assessment #1||
$298 ($513 x .58 proration factor*)
The following resources provide information and guidance on Supplemental Assessments, which are implemented by sections 75-75.72 of the Revenue and Taxation Code.
LTAs provide an ongoing advisory service for county assessors and others interested in the property tax system in California. The letters present Board staff's interpretation of rules, laws, and court decisions on property tax assessment. The following LTAs pertain to assessment or procedural issues involving supplemental assessments in California.
|Title||Letter to Assessor|
|Appeals||84/33, 90/54, 95/32|
|Disabled Veterans Exemption||84/58|
|Disaster Relief||83/128, 85/75|
|Electric Generation Facilities||99/83|
|Eminent Domain||85/75, 85/126|
|Exemptions||84/58, 84/67, 85/13, 85/71, 95/14, 95/55|
|Fixtures||85/24, 86/32, 87/58, 91/59|
|Homeowners' Exemptions||84/58, 85/71, 85/75|
|Late-Filed Exemptions||85/71, 85/75, 86/19, 86/34, 93/78, 94/30|
|Legislation||83/82, 83/111, 84/103, 85/126, 87/25|
|Mobilehome/Manufactured Home||83/128, 93/46|
|Mobilehome Park, Transfers of Individual Interests||99/87|
|Open Space (Williamson Act)||83/128|
|Possessory Interests||83/132, 86/12|
|Questions and Answers||83/128, 83/132, 84/18, 84/33, 85/75|
|Removal of Property||83/128, 86/09|
|State Assessees||85/75, 2001/024|
|Statute of Limitations||88/75, 92/75, 93/03, 94/32, 95/35, 96/52, 2001/035, 2002/014|
|Wireless Communication Tower Sites||2001/024|
Annotated legal opinions are summaries of the conclusions reached in selected legal rulings of California State Board of Equalization counsel. The following legal opinions pertain to questions involving supplemental assessments.
|Title||Annotated Legal Opinion|
The Assessors' Handbook is a series of manuals developed by the staff of the Board of Equalization in an open process. The objective of the Assessors' Handbook is to give county assessors, their staff, and other interested parties an understanding of the principles of property assessment and real and personal property appraisal for property tax purposes. The Assessors' Handbook is intended to serve as a guide for the appraisal and assessment of real and personal property. Additionally, the Assessors' Handbook presents the Board staff's interpretation of rules, laws, and court decisions on property assessment.
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, 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.
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.
Assume that 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.
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.
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.
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.
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)
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. Please see the Exemptions page for more information.