California 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.
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 -$50,000Prior Assessed/Taxable Value $100,000Supplemental Assessment x 9 1/2Remaining months in Fiscal/Tax Year $75,000Supplemental Assessment x 1%Tax Rate $750Supplemental 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.
Ask your accountant for more information on supplemental tax assessments.