Are Your California Property Taxes On Supplements?

Are you one of the 77% of U.S. adults who takes some form of nutritional supplement?  If so, you’ve contributed to the estimated $31 billion dollars of revenue that this industry generated in 2018.  So it stands to reason that California counties would want in on the supplemental action and they’ve figured out just the way to do it…

Seriously, taking on home ownership for the first time is a big responsibility.  And since many first time buyers are coming from a background of paying rent, it’s important that we, in the mortgage industry, educate them about how making a monthly rent payment differs from coming up with the new housing payment once the home is yours.  Specifically, buyers are no longer just responsible for their “payment,” meaning the rent or mortgage payment, but once owners, they also shoulder the responsibility of  homeowners insurance premiums and property taxes.  We’re going to focus on the tax piece and we’re going to take it a step further and detail what you need to know about supplemental property tax bills in California.

(Trying to) Keep It Simple

When you buy a home in California, your property tax rate will be determined, in part, by the price you pay for the home.  If you’re buying a previously owned home, this was also true for the seller, though the seller’s tax basis will almost certainly be different than yours.  Supplemental taxes effectively adjust the seller’s tax basis to yours, as the buyer, and a separate bill is often issued to “catch up” the new basis with the previous one.  Let’s use a rudimentary example.  If the seller paid $800,000 for the home five years ago and had a 1.25% property tax rate, his annual tax bill is $10,000.  If you buy the home for $1,000,000 and the tax rate is the same, your annual taxes will be $12,500.  Again, being overly simplistic, a $2500 supplemental bill will be issued to you, the new buyer, in the first year.

When Is a New Buyer Billed for Supplemental Taxes?

“When” is not easy to predict and will depend on the individual county.  After your purchase, the County Assessor will appraise your property and advise you of the new supplemental assessment amount.  Bear in mind that the assessed value is usually neither the same as your lender’s appraisal value nor the price you paid for the home, though the latter is part of what drives the tax basis going forward.  Before the supplemental bill is issued you can appeal the Assessor’s assessment and, if you will occupy the home, apply for a Homeowner’s Exemption, which will lower your basis slightly.  The bill, once issued will indicate the amount owed and the date the taxes will become delinquent.

When and How Do I Pay My Supplemental Taxes in California?

All supplemental taxes are payable in two equal installments.  The taxes are due on the date the bill is mailed and are delinquent on specified dates depending on the month the bill is mailed as follows:

  1. If the bill is mailed between July and October, the first installment becomes delinquent on December 10th of the same year.  The second installment becomes delinquent on April 10th of the next year.
  2. If the bill is mailed between November and June, the first installment becomes delinquent on the last day of the month following the month in which the bill is mailed.  The second installment becomes delinquent on the last day of the fourth calendar month following the date the first installment becomes delinquent.

A very important item to note is that supplemental taxes are most often the responsibility of the homeowner EVEN IF the owner has an impound/escrow account for their “regular” property taxes.  So all those who have a VA or FHA loan, take note.  Yes, your loan’s servicer may contact you regarding the supplemental bill and may provide options on how to pay them most efficiently given your servicing arrangement, but barring any notice or contact, the supplemental taxes are your responsibility and are IN ADDITION to your regular property taxes being handled through your mortgage payment.  And remember, supplemental taxes are only applicable to the first year of ownership.  Thereafter, the basis correction is factored into the regular tax bills and you will only continue to receive those.  In CA, the regular bills are issued in October, technically due November 1 for the first installment, with a late date of December 10.  The second installment is due February 1 and late April 10 and you can find more information about paying your “regular” property tax bill HERE.

If you find your property taxes on supplements, get in touch any time if you need to cut through the noise and better understand your responsibility as a new homeowner.

Pass the broccoli, Barry, 

 

Robert J. Spinosa
Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959
rob.spinosa@rate.com

Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate. In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283

When Are Marin County Property Tax Bills Due?

As I write this in October of 2019, my very own Marin County property tax bills just arrived. Well, allow me to reframe that. It is widely understood that our real estate tax bills are issued “sometime in October,” but when you actually receive them in the mail on October 1, it says all you need to know about our Assessor’s intent to get the point across. So with the same procrastination exhibited by most fellow Marin County property owners who will join me in actually paying the bill a few days before a penalty is assessed, I thought it was a ripe opportunity to share some basics on how, when and where to pay our real estate taxes and at the same time avoid the consequences of late payments.

Property Tax Bill Information and Due Dates

Secured property tax bills are mailed in October and payable in two installments:

  • First installment due date: November 1
  • Second installment due date: February 1

“Now hold on a minute!” you say. “I was told I could pay in December and April!” Well, technically, you can.  The late dates for the installments are December 10 and April 10, respectively. And what I’ve noticed after a long career in home finance is that most county residents pay just before these late dates. In fact, if you really want to people watch at the post office and you can’t make it on any given April 15, your next best viewing opportunity is very likely December 10. Late penalties are 10% of the installment amount, so it’s not just a slap on the wrist. State law extends the deadlines above to the following Monday if December 10 or April 10 fall on a weekend, but postmark determines the payment date. If you’re late and don’t include the penalty, the county will send back your original payment.

What About an Impound Account?

If you have an escrow or impound account through which your mortgage lender pays your taxes, your property tax bill will state, “a copy of this bill was sent to a paying agent at their request.” If you are unsure of whether or not your lender has paid your tax installment, you should clarify this with your servicer. They are the folks who send you your monthly mortgage statement. I always advise my clients to let me know if they need help with this — I just feel it’s a service any good mortgage professional should provide, and we handle the “straightening out” of countless, anxiety-inducing property tax questions throughout the course of any year. Note that if you pay your mortgage in full or refinance during the course of any year, you may become responsible for your tax payments even if you’ve impounded all along. Again, call us if we can assist.

How to Pay

Payments may be made via any of the methods below and partial payments are NOT accepted by the Marin County’s Assessor’s office.

  • Online:  www.marincounty.org/Taxbillonline. You will need the parcel number (APN) from your bill.
  • Phone: 1-800-985-7277 using your bill number.
  • Mail: Marin County Tax Collector, PO Box 4220, San Rafael, CA 94913-4220
  • Office: 3501 Civic Center Drive, Room 202, San Rafael, CA 94903 (Mon/Fri, 9am to 4:30pm)

Remember that if you’re in the loan process and you need to document payment of any installment (which can occasionally be a requirement), you’ll probably need to obtain a receipt by paying at the window.

What About Supplemental Tax Bills?

Great question! The County issues a supplemental assessment when a change in ownership occurs. This bill reflects the difference between the seller’s basis and your new and ongoing basis and you’ll only receive it in that first year of the purchase. Afterwards, the correct tax amount is entirely reflected on your regular bill. The Assessor’s office provides owners with new, previous and supplemental values and you can always call them directly at 415-473-7215.

Every day I work to help people buy and refinance real estate in Marin. Often it’s a challenge for them, mostly due to lack of inventory and high home prices. As the rest of us grouse and grumble about writing our checks to the county, let’s remember that it’s also a privilege to do so.

Read my lips, 

 

Robert J. Spinosa
Vice President of Mortgage Lending
Guaranteed Rate
NMLS: 22343
Cell/Text: 415-367-5959
rob.spinosa@rate.com

Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate. In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate’s Human Resources Department.

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 – (866) 934-7283