As real estate professionals, you play a vital role in guiding your clients through the home-buying process. Whether your clients are new homeowners or have recently completed construction, understanding the supplemental property tax bill is crucial. Here’s a simple breakdown to help you explain it to your clients.

What is Supplemental Property Tax?

When your clients buy a home or complete new construction, the property's assessed value typically changes. This change means they might owe additional property taxes, which is what the supplemental property tax bill reflects. It’s issued by the county’s tax assessor to account for the new property value.

How Does This Tax Affect Your Clients?

This tax affects your clients only if they’ve recently purchased a property or completed new construction. The supplemental property tax bill becomes a lien against the property, and the amount owed depends on when the ownership change or construction was completed.

Lowering the Tax Assessment

Advise your clients to apply for a homeowner’s exemption as soon as they buy the property or finish construction. This can help lower the assessed value and reduce the tax bill.

Billing Process

The timing for receiving the bill can vary depending on the county. Here’s what generally happens:

1. The assessor appraises the property and notifies the homeowner of the new value.

2. The county calculates the supplemental tax amount.

3. The tax collector sends a bill with payment due dates.

Payment Options

Clients can spread the payments into two installments:

• For bills mailed between July and October, the first payment is due by December 10 of the same year, and the second payment is due by April 10 of the following year.

• For bills mailed between November and June, the first payment is due on the last day of the month following the bill's mailing, and the second payment is due four months later.

Appealing the Assessment

If your clients believe the new assessment is too high, they can appeal. Encourage them to start by discussing their concerns with the assessor, who can provide details on the appeal process. Also, make sure they apply for the homeowner’s exemption if they qualify.

How is the Bill Calculated?

The assessor uses this formula: the new assessed value minus the previous value, minus any exemptions. The tax rate is generally 1% plus recapture for voter-approved debt.

Importance of Timing

The effective date of the ownership change or construction completion affects the supplemental tax amount. If this date is July 1, the full assessment applies for the next tax year. For other dates, the tax is prorated. For instance, if the effective date is October 1 and the full-year tax is $1,000, a .75 proration factor means the bill will be $750.

Proration in Escrow

Unlike regular annual taxes, the supplemental tax is a one-time bill and isn’t prorated in escrow. It’s entirely the responsibility of the property owner.

For Home Buyers and Homeowners

If you’ve just bought a home or recently completed construction, understanding the supplemental property tax is essential. Here’s what you need to know:

• Supplemental Property Tax Bill: Expect a new tax bill reflecting your property’s updated value.

• Homeowner’s Exemption: Apply for this to possibly lower your tax bill.

• Payment Schedule: Know the due dates to avoid penalties.

• Appealing the Assessment: If the assessed value seems too high, you can appeal it.

By understanding and explaining these points, you can better support your clients through the home-buying process and help them manage their supplemental property tax obligations. If they have more questions, encourage them to reach out to their county tax assessor or a tax professional.

The information provided here is for informational purposes only and is subject to change without notice. Please remember to consult legal, tax, or other professional advisors before relying on this information.