These taxes are calculated based on the difference between the previously assessed value and the newly assessed value of the property. The new assessed value is determined by the county assessor’s office after the sale or improvement. In the case of a purchase, the new assessed value mirrors the purchase price.
The supplemental tax bill is for the additional tax not covered by the annual tax bill and is generally not paid out of the impound account. The amount is a function of what the difference is between the previous assessment and the new assessment, and how long that difference persisted until the annual tax assessment is updated.
Every new owner of a property will be responsible for paying the supplemental property taxes. The obligation for this tax is entirely that of the property owner. It’s important to note that unlike your ordinary annual taxes, the supplemental tax is a one-time tax that dates from the date you take ownership of your property or complete the construction until the end of the tax year on June 30.
For borrowers who recently purchased a home, and you have an impound account1, it is also important to understand how that account was set up. Was it set up using the projected property taxes based on the new purchase price, or was it set up based on the current assessment? If it was set up based on the current assessment, then there will be a shortfall when the property is reassessed, if the newly assessed amount (purchase price) is higher than the previous assessment. If it is set up based on the projected assessment (if the purchase price is higher than the previous assessment), then there will be a surplus in the impound account as the amount collected will exceed the amount of the previous assessment which is reflected on the bill from the tax assessor’s office until they update the assessed value. Loan servicers are required to perform an annual review of impound accounts, and if there is a surplus, it is refunded to the borrower. It is important to understand that this is not ‘found’ money, as there will be a supplemental tax bill to follow. Again, the loan servicer does not pay the supplemental tax bill.
1 See Impound or Escrow Accounts. (8/30/24)
