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Buying Real Estate? | Selling Real Estate? |
Buying Real Estate?
What Should I Expect Now That I Own Real Estate?
New owners may receive any of the following inquiries or notices that relate to their property tax assessment:
- Change of Ownership Statement (COS)
- Homeowner's Exemption Application Form
- Notice of Supplemental Assessment
- Supplemental Property Tax Bill
- Annual Secured Property Tax Bill
You WILL NOT receive a new annual secured property tax bill until the following September. The new owner is responsible for all applicable property taxes from the date he/she acquires the property. Contact the Tax Collector to determine your tax liability.
Prop.13 - To Reassess Or Not To Reassess...
In accordance with Prop. 13, certain types of ownership changes, including sales, transfers, or inheritances are generally reassessable. A reassessable change in ownership establishes a new base year value for the property that equals the market value of the property at the time of transfer. A reassessable change in ownership will generate a Notice of Supplemental Assessment.
Non-reassessable changes in ownership can include transfers between husband and wife (including those resulting from death or dissolution); security interest transfers (co-signers); and changes in the way title is held (transfer from individual(s) to a family trust). Also, refinancing is not considered a change in ownership as long as the same parties remain on title before and after the refinancing. Propositions adopted by California voters can exclude certain transfers from reassessment and may reduce property tax liability.
What Is A Notice Of Supplemental Assessment?
A notice of supplemental assessment typically represents a change (increase or decrease) in taxable value. If the market value of property is different from the previous owner's taxable value, the new owner will receive a Notice of Supplemental Assessment and a supplemental tax bill or refund. If the market value of the property is higher than the previous owner's taxable value, the new owner will receive a supplemental bill. If the market value of the property is lower than the previous owner's taxable value, the new owner will receive a supplemental refund. It will take approximately 2-3 months to receive this refund from the Tax Collector.
Usually supplemental taxes are not collected in escrow. Taxes collected in escrow are based on the previous owner's taxable value. Notices of supplemental assessment and supplemental tax bills are mailed several months after escrow closes. Supplemental assessments are pro-rated from the date of transfer to the end of the tax year (June 30th).
Changes in ownership that occur between January 1 and May 31 are subject to two supplemental assessments because of the State's property tax calendar. Supplemental assessments are typically paid by the new owner directly and are not included in impound accounts. However, you may want to call your lender directly to ask if there are sufficient funds in your impound account to pay for the supplemental assessment. Supplemental property tax bills are mailed within 2 weeks of the Notice of Supplemental Assessment. Due dates for supplemental taxes can vary. Please read the tax bill carefully, or contact the Tax Collector for more information.
Property Tax Information And Dates To Remember
The Assessor mails real estate owners an annual notice in July reflecting the property's taxable value. Owners can Appeal an Assessment between July 2 and November 30 each year if their property's market value on January 1 was lower than the taxable value on the notice. Annual secured property tax bills are mailed by the Tax Collector in September.
Secured property taxes can be paid in two installments. The first installment is due November 1 and delinquent December 10. The second installment is due February 1 and delinquent April 10. Other Dates to Remember.
How Are Property Taxes Calculated?
The taxable value of real estate is the basis of secured property taxes. Property taxes are calculated by multiplying the property's taxable value by the tax rate for the area where the property is located.
For example:
$250,000 Taxable Value X 1.15% Tax Rate = $2,875 Property Taxes
Tax rates include a 1% basic levy plus any bonded indebtedness, special assessments or Mello-Roos assessments that apply to a specific tax rate. Tax rates can vary significantly from one area to another.
Adding Or Removing Co-Signer(s)
Whenever a reassessable change of ownership occurs, Proposition 13 requires the Assessor to revalue property for tax purposes. Certain changes of ownership are excluded from reassessment, including changes that add or remove party(ies) from title who have no beneficial interest in the property. This is called a security interest transfer. The most common example of a security interest transfer is adding or removing co-signer(s) from title.
To avoid reassessment in this situation, you are required to:
- Complete a Security Interest Affidavit form
- Provide evidence of an agreement between the parties (see below)
- Provide supporting evidence (see below)
- Send the affidavit and copies to our office
Acceptable evidence of an agreement between the parties is:
A copy of the written agreement between the parties to reconvey the property upon payment of the debt.
Acceptable supporting evidence is:
- A copy of the letter from the mortgage loan company requiring a cosigner(s) in order to approve the loan and a mortgage statement covering the time period when the parties involved were on title together.
- A copy of the appropriate income tax return schedule indicating the mortgage interest paid or the depreciation claimed and a mortgage statement covering the time period when the parties involved were on title together.
A signed Security Interest Affidavit and other required information should be mailed to our office. For your convenience our address is included on the form. If you have any questions, please call (714) 834-2727.
Selling Real Estate?
You May Be Able To Transfer Your Prop. 13 Value To Your Child(ren) Or Grandchild(ren)
Parent-Child Transfer
Proposition 19 allows a parent(s) to transfer his/her principal residence, and up to $1 million other real property, to his/her children without reassessment. The million dollar limit refers to assessed value, not market value.
Grandparent-Grandchild Transfer
Proposition 19 allows a grandparent(s) to transfer up to $1 million of property to his/her grandchildren without reassessment, if both parents are deceased.
You May Be Able To Take Your Prop. 13 Value With You
Age 55 And Older
Proposition 19 allows a property owner who is at least 55 years of age to transfer his/her Prop. 13 value to a qualified replacement property. An owner cannot transfer his/her base year value more than once.
Severely And Permanently Disabled
Proposition 19 allows a property owner who is severely and permanently disabled to transfer his/her Prop. 13 value to a qualified replacement property.
Substantially Damaged Or Destroyed Property
Proposition 50 allows a property owner to transfer his/her Prop. 13 value to a replacement property if his/her property was substantially damaged or destroyed by a Governor-declared disaster.
Contaminated Property
Proposition 1 allows a property owner to transfer his/her Prop. 13 value to a replacement property if his/her property is deemed contaminated by a state or federal agency. Residential property must be deemed uninhabitable due to environmental contamination, and non-residential property must be deemed unusable due to environmental contamination. Other restrictions apply.
Property Taken By Government Action - Eminent Domain
Property owners may be able to transfer their Prop. 13 factored base year value of real property taken by government action to a comparable replacement property located anywhere in California, if certain conditions are met. Value limits and other requirements apply.
Can You Take Your Exemption With You?
No. You will need to reapply for an exemption on your new property. You should notify the Assessor Department to cancel any exemptions you may have on the property you sold. Duplication of exemptions may result in additional tax liability.
We Need Your New Address
Occasionally assessments for which you are responsible are mailed after you have sold the property. Avoid unexpected penalties, interest and tax liens that show up on your credit report by sending a Change of Address Notice.
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