Tuesday, March 24, 2015

Buying a Sacramento home? Use this tool to calculate your Supplemental Tax Bill...

Last week I attended a presentation by Kathleen Kelleher, Sacramento County's Tax Assessor. I've met her several times and seen several presentations regarding Sacramento County tax assessment and collection, but this time she introduced a new tool available for use to calculate the "Supplemental Tax Assessment." You can find the Supplemental Tax Calculator here.

What is a Supplemental Tax Assessment bill? In a nutshell, its a bill to collect the difference between the previous owner's tax assessment, and the new owner's tax assessment. Clear as mud, right? If you buy a house, you will receive MULTIPLE disclosures regarding the fact you may have to pay an additional tax bill at some point in time after closing.

Here is an example from a real life scenario. Let's say you are buying a home in East Sacramento that has been owned by the same family for many years. They purchased the property in 1968, and their current assessed value is $98,156. Their annual tax bill is $1,214 including the 1% base assessment, and all the "direct levies." You are purchasing the home for $400,000. Your new tax assessed value will be based on your acquisition cost, and adjusted annually for inflation. Obviously there is a significant difference in the previous owners tax assessment, vs your new tax assessment - $301,844.

Under these circumstances, you should budget for a relatively large "Supplemental Tax Assessment" bill. In this instance, using the calculator online and assuming you close on March 31, you will receive a "Partial Supplemental Tax Bill" for $754 within a few months of closing, and then another one a few months after that for $3,018. That's something you will want to budget for! The amount owed can change based on when during the state's fiscal year you close your transaction, so keep that in mind and use the online tool for help.

Obviously not everyone buys a home where there is such a gap between the previous owner's assessment and the new owner's assessment. In fact, in the days of short sales and foreclosures, often times the new owner's tax assessment was way less than that of the previous owner. But it is something to be aware of and this calculator can help you budget for that...

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