By Kathy McSherry 

Hi Kathy:

I purchased a new home from a builder in Mission Valley towards the end of last year. About eight months after I moved in, I received a separate tax bill called a Supplemental Property tax. Can you explain the difference between normal property taxes and supplemental taxes? I’m originally from New York and also not familiar with Proposition 13.

—Michael H.

Hi Michael:

Property taxes can be very confusing in the state of California.

Prop 13, which passed in 1978, established the tax rate as 1 percent of the assessed value plus any assessment bonds approved by a popular vote. In addition, they cannot go up by more than 2 percent per year. When property is sold, it is then reassessed at market value. Before Prop 13, the property tax in California was 3 percent of assessed value with no limit on the annual increase. Back then, if a house in your neighborhood sold for more than yours, you cringed in fear of your next tax bill. People were losing their homes because of these uncontrolled tax bills. Today, every owner of property in the state is covered by Proposition 13. Now your taxes are not based on your neighbor’s taxes, but on the price that you voluntarily agree to pay for your new home. If you ever find yourself on a fixed income, chances are, because of Proposition 13, you’ll be able to keep your home.

All owners of real property in California must pay property taxes, unless exempted by the state. A secured property tax is against real property. San Diego’s real property tax is “ad valorem” (a tax according to value).

State law requires the County Assessor’s Office to reassess property effective upon change of ownership or completion of new construction. The assessor must issue a supplemental assessment that reflects the difference between the prior assessed value and the new assessment. This value is then prorated based on the number of months remaining in the fiscal year ending June 30. This supplemental tax bill is  in addition to your regular property tax bill and is a one- time bill.

Here are the basics steps of how you received your Supplemental Property tax bill.

• A change in ownership or completion of new property triggers the reassessment process.
• The County Assessor reassesses the property and gives the new assessed value of your home to the County/Auditor or Controller.
• The Auditor/Controller applies the applicable tax rate to the new assessed value to determine the amount of property tax that is owed.
• The Treasurer —Tax Collector mails the tax bill(s) and collects payment.

Since I personally experienced this, as I purchased a new home in Mission Valley about a couple years ago, my bill was slightly less than 1 percent of the purchase price of my new home. I recall having the option to pay it in two installments.

Many taxpayers get confused as to when property taxes are due. The first installment of secured property taxes is due Nov. 1 and becomes delinquent after Dec. 10.

Many people think they are due Dec. 10. The second installment is due Feb. 1 and delinquent after April 10. Failure to pay on time and miss the deadline is an immediate 10 percent penalty following the delinquent date. A $10 charge is also added to the second installment. If payment for both the first and second installments are not received by June 30, the property tax becomes tax defaulted. Penalties will then begin to accrue starting July 1 at an annual 18 percent interest rate (1.5 percent per month) and a $33 redemption fee is added to the bill.

They do accept credit cards for a 2 percent convenience fee.

Keep in mind that as a new property owner, California law requires that you be responsible for the timely payment of taxes on your property. Do not wait to be notified or expect receipt of a tax bill. Make it a matter of your personal attention and responsibility to find out what taxes are due and owing by you, as required by law.

For more information, write to: County Administration Center, 1600 Pacific Highway, Suite 103, San Diego, CA 92101; call 619-236-3771; or visit online at sdarcc.com.

Hope this helps Michael.

—Kathy McSherry is a veteran Realtor in Mission Valley with Caldwell Banker West. Email your questions to [email protected].