Property taxes in California are not aligned to a fiscal calendar. California property tax year runs from July 1 to June 30. Tax bills are sent out in October and contain two bills (AKA installments)*. The first is due November 1 and delinquent December 10 of the same year; the second is due February 1 and delinquent April 10 of the following year. For example:
- You get your property tax bills in October 2020
- The first bill (AKA installment) is due on or before November 1 and delinquent December 10th, 2020
- The second bill (AKA installment) is due on or before February 1 and delinquent April 10th, 2021, the following year
Although rare, some homes are purchased right as property taxes are issued. To handle this, your escrow officer will figure out EXACTLY how much the buyer and seller owe as it relates to their share of ownership for property taxes.
To ensure you have the most up-to-date information on property taxes, please contact your real estate agent, title agent, or consult local government.
Supplemental Taxes
Sellers and their agents are required to provide prospective buyers with a supplemental property tax bill notice.
When ownership changes, the respective county assessor is required to revalue the property pursuant to the California Supplemental Tax law passed in 1983 to provide greater revenue for California schools. This law arose as a result of provisions of Proposition 13, passed in 1978, that often created great increases in the assessed values of properties when they changed ownership, yet the tax due on these greater values could not be collected for as many as 15 months. This notice requirement is completely different from the Mello-Roos and Special Assessment disclosure requirements. The legislature was very clear that the notice was meant to be just that – a notice that the buyer will be receiving a supplemental property tax bill.
The reason this notice is important to buyers is because the supplemental tax bill is sent to the buyer only, and not the lender. If the buyer has arranged for the property tax payments to be impounded, where they are collected and paid by the lender, these tax bills are not normally included in the impound account and may not be paid by the lender. In this case, the buyer will have to independently pay the supplemental tax. If you have an impound account, check with your lender about whether supplemental taxes can be added to your impound account payments.
Further, with this new notice, the seller is not required to provide an estimated calculation of what the property tax may be or will be upon the close of escrow.
In determining the increase in taxes, the following factors are taken into consideration:
- What was the value prior to the change of title or completion of improvements?
- What is the new value?
- What is the tax rate in effect at the time of the change?
- How much of the fiscal year remains to the taxes being adjusted?
It’s important to make homebuyers aware that they may in fact pay property taxes as many as three times in the first year, including:
- Paying the prorated amount of property tax at the escrow closing to reimburse the seller for any upfront taxes they have already paid
- Paying the Supplemental Tax Bill for the increased assessors’ valuation of the property
- Paying the subsequent regular annual property tax bill that comes from the assessor, which, in many cases, is paid by the lender through the mortgage impound account
This article is part of the Home Buyer Guide and Home Seller Guide.
