Supplemental Assessments

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Assessor

John Tuteur Assessor

Supplemental Assessments: Offspring of Proposition 13

Before the passage of Proposition 13 by the voters in 1978, California's 58 county assessors valued property for property tax purposes using a cyclical review of one-quarter of all properties each year for possible reappraisal as of that year's lien date (when taxes become a "lien" against the property). Proposition 13 changed that four-year mass-appraisal cycle to the reappraisal of individual properties whenever there was a change of ownership or new construction. This new process meant that the date of the recording of a deed or the completion of new construction became the "event" date for that reappraisal rather than the "lien" date.

It's all in the dates

Thus, prior to supplemental assessments being enacted, a home which had a March 1, 1984, (lien date) Proposition 13 base-year value of $50,000 and sold on March 2, 1984, (event date) for $150,000 would not see a tax bill based on that new base year value until the 1985-86 tax year (July 1, 1985 to June 30, 1986 - billed in November of 1985) because the 1984-85 tax bill (July 1, 1984 - June 30, 1985) would be based on the March 1 1984 "lien date" value of  $50,000.

Supplemental assessments

To equalize the treatment of property owners who bought just before and just after the lien date and to ensure that tax revenue was not lost, the California State Legislature passed a bill effective July 1983 creating supplemental assessments, based on the new valuation procedure, for the period extending from the first of the month following the "event date" to the end of the appropriate tax year. In the example given above, the new owner would receive one supplemental assessment for the period April 1, 1984, through June 30, 1984 (the last three months of the 1983-84 tax year) and a second supplemental assessment for the period July 1, 1984, through June 30, 1985, the 1984-85 tax year. The bill for these supplemental assessments would be based on the difference between the original base year value of $50,000 and the new base year value of $150,000, i.e. $100,000.

Works both ways

While supplementals were meant to retrieve lost revenue, they also work equitably to create refunds if the event triggers a reduction in value rather than an increase. For example, "new construction" also includes removal of a structure or demolition. Thus, before supplementals, if a property owner tore down a building on March 2, 1995, which had a Proposition 13 base year value of $32,000, she would not see a reduction in her tax bill until the 1996-97 tax bill came out in November 1996. With supplemental assessments, she will receive a refund check for the period April 1, 1995, through June 30, 1995, (since she had paid a full year's taxes on that building but had only 9 months use of it) and a refund for the entire 1995-96 tax year, since the value for that year had been established the day before she tore down the building.

Escrow or impound accounts

New homebuyers must remember that supplemental bills are in addition to the regular tax bill and are not automatically paid by their mortgage company if they have an impound account. They must call their mortgage company and ask if there are enough funds in their impound account to pay the bill. If there are not enough funds, or if they do not have an impound account, the homeowner should pay the bill(s) directly.

Should you have any questions please contact Napa County Assessor-Recorder-County Clerk John Tuteur at 707.253.4459 or by e-mail john.tuteur@countyofnapa.org

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