Supplemental Property Tax

    Supplemental Property Tax

    Oct 27, 2017

    One of the most misunderstood fact that causes buyers' confusion & concern is the supplemental property tax bill. So what is this supplemental tax?

    Supplemental property tax is a one time tax bill that happens at the time of transfer of title. So, you just closed escrow on your new house. Your property tax is impounded with your mortgage payment, but, what? what is this supplemental tax bill I received in the mail? During escrow, escrow, your lender & agent can only estimate what your property tax will be. So, escrow can only do proration based on the seller's old tax bill vs. your new tax. This creates a one time bill of the difference for the period of time between your ownership & next tax bill's due date.

    For instance, some time ago, I bought a house for my parents to move into. Then, my father was diagnosed with cancer and they decided not to move. We turned around and sold it within a few months of closing the escrow. This all happened before property tax was due. We never received the supplemental tax bill so we didn't' pay it, forgetting all about it. One day, we were applying for credit and was told we had a tax lien. This surprised us as we habitually pay all our bills on time. (in U.S. your credit is more important than having money. I have a 1% down payment loan program for people with above 700 mid credit score.) As we found out it was the supplemental tax, and it had been a couple of years, the few dollars grew to be over $300 dollars with penalty.

    lesson learned? Remember to contact the Assessor's office re: your supplemental tax bill, especially, this time of the year, because the Assessor's office has to take care of all the tax bills & they tend to run behind time. There is no forgiveness even when you didn't receive your bill late. The bill & following penalty will be your responsibility.

    Have you had any experience similar you like to share? I'd love to hear from you. happy Friday.