What’s a Supplemental Tax bill?

February 19th, 2009

Buying a home in Oakland, Berkeley Piedmont, especially for first time buyers results in the question “What’s a supplemental tax bill?”

State law requires the Assessor’s Office to reappraise property immediately upon change of ownership or completion of new construction. The Assessor’s Office must issue a supplemental assessment which 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 30th.
For example, if property is purchased on September 15th with a market value of $150,000, and it has a prior assessed value of $50,000, this will result in a supplemental assessment for the difference

($100,000) prorated for the remaining months in the fiscal year (9 months from October through the following June):
$150,000 New Purchase Price/Market Value
-$50,000 Prior Assessed/Taxable Value
$100,000 Supplemental Assessment
x 9 1/2 Remaining months in Fiscal/Tax Year
$75,000 Supplemental Assessment
x 1% Tax Rate
$750 Supplemental Tax Bill

This supplemental tax bill is in addition to the regular tax bill which is based on the assessed value as of March 1st of each year. If a second sale or transfer of the property occurs during the same fiscal year, but before the mailing of the first Supplemental Tax Bill, the taxes will be prorated between May 31st, a second Supplemental Assessment will be required for the next fiscal year.

Credit for this article goes to Chicago Title Co.  It came to me from Harvey Gabel and David Anderson with Chicago Title’s Oakland CA Montclair Branch.  They did a great job explaining in a simple straight forward manner so I thought I’d pass it along.  I’ve done business with Chicago Title for over 10 years.  I can vouch for their professionalism.  If you’d like to contact them directly go to http://www.harveygabelchicago.com .

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