I happily purchased a second-hand house in Silicon Valley and finally became a homeowner. However, why did I receive two property tax bills at different times when it's time to pay property taxes?
The two property tax bills you received are likely the Secured Property Tax Bill, which is the regular property tax bill, and the Supplemental Property Tax Bill, which is a bill for additional property taxes. But why do you have both a regular tax bill and a supplemental tax bill?
Before the property was transferred to your name, it belonged to the previous owner. Assuming the previous owner bought the property for $1 million, when they paid property taxes for the first year, it was based on the assessed value of $1 million. In the second year, let's say the market value of the property increased to $1.05 million, but property taxes are not based on the current market value. According to Proposition 13 in California, the assessed value of the property can only increase by a maximum of 2% each year. So, in the second year, the assessed value of the property would be $1 million multiplied by 102%, which equals $1.02 million. If we continue to calculate with a 2% annual increase, by the eleventh year, the assessed value of the property, which is nearly $1.22 million, would still be much lower than the market value, which has increased to, let's say, $1.55 million.
When you purchased the property for $1.55 million, according to the market value at the time of transfer, if you received two property tax bills in the same year, it's likely that the first bill, the Secured Property Tax Bill, was based on the previous assessed value of $1.22 million. This is because the county assessor might not have had time to adjust your tax assessment promptly after the purchase. After a few months following the transfer, you would receive the second bill, the Supplemental Property Tax Bill, reflecting the increase in your tax assessment to the purchase price of $1.55 million.
If you're buying a home to live in California, it's highly recommended that you apply for the Homeowners' Property Tax Exemption to save on property tax expenses. This application enables you to qualify for an exemption of up to $7,000 in assessed value, potentially saving around $70 to $80 on property taxes annually. How do you apply? Please refer to my related article for more information：Attention California Homebuyers: Don't Forget to Apply for Homeowners' Exemption - Save $70-80 on Property Taxes Annually!"。
A final reminder concerns the timing of property tax payments. Property taxes can be paid in two installments: the first installment is due on November 1st and must not exceed 5:00 PM on December 10th; otherwise, a penalty of 10% will be imposed. The second installment is due on February 1st and must not exceed 5:00 PM on April 10th; failure to pay on time incurs a penalty of 10% plus a $10 processing fee. If property taxes remain unpaid for five years, the government has the authority to auction off the property.
