What is supplemental tax
OFFICE OF TREASURER & TAX COLLECTOR
Property Tax Division
We have had taxpayers provide feedback to our office which indicates that purchasers of real estate are either unaware of or do not understand the supplemental property tax. To help all parties involved in real estate transactions, we provide the following information.
The supplemental property tax is an additional tax beyond the normal annual tax for any increase in the value of property as determined by the Assessor. This will include the purchase of property at a value higher than the former assessed value, the addition of a home to a vacant lot or any other major improvements such as a new pool or the addition of a room onto a house.
The supplemental tax is billed separately and reflects the tax on the difference in the new value of the property versus the old value. For example, if a property with an assessed value of $100,000 is purchased for $150,000, the difference ($50,000) is taxed in a supplemental (or additional) tax billing at the property's area tax rate. The tax rate will range from the basic 1.0% to just under 1.2% depending on the code area. For the example of a $50,000 increase in value this would mean that the supplemental tax could range from $500 to $600. In our world with large $200,000 and $300,000 property assessments (especially with the construction of a new home) the taxpayer might face a supplemental tax bill for thousands of dollars.
Supplemental tax bills are prepared throughout the year and have
deadlines to pay without penalty of 30 days following receipt of the tax bill to pay the first half and four months thereafter to pay the second half. Due to the time frame necessary to process the change in value through the Assessor's Office, apply the correct area tax rate and compute the tax amount by the Auditor-Controller's Office, many months will have passed before the new owner of the property (the taxpayer) will receive the supplemental tax bill. Normally even taxpayers with impound accounts will have to pay this supplemental tax bill "out of pocket" unless the impound account company agrees to pay the tax bill out of the impound account. Once the annual tax billing reflects the increased value of the property, no further supplemental tax billings are necessary.
As always, any reduction in value will result in a refund of taxes paid or a reduction in taxes owing.
State laws related to the supplemental tax can be found in California State Law Revenue and Taxation Code sections 75.10 through 75.55. These sections are in law books at the Law Library or can be found on the Internet at www.leginfo.ca.gov .
- E-mail the Tax Collection Division at: firstname.lastname@example.org
- or the Tax Auction Administrator at: email@example.com
- or the Treasurer/Tax Collector at: firstname.lastname@example.org
- By Phone: (209) 525-6388 ( Monday-Friday, 8:00 a.m. - 5:00 p.m. )
- By Fax: (209) 525-7868
- In Person: 1010 Tenth Street, Suite 2500, Modesto, CA 95354
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