The term, supplemental taxes, is confusing. We pay property taxes each month, wouldn’t the supplemental taxes be included in this? No, unfortunately. Supplemental taxes are a single tax on your property when it changes ownership, or has a significant reassessment. It is calculated by taking the difference of the previous appraised value, and the current appraised value. So, if your home was previously appraised at $200,000, you purchase it for $800,000, the difference would be $600,000 and that is what is taxed.
Supplemental taxes never used to be much of a big deal. Houses changed ownership often, and supplemental taxes were minimal. We’re talking, a couple hundred dollars. Now, they are commonly a few thousand dollars. So, what the heck happened?
Well, in this market, a lot of houses being sold are ones that haven’t been sold in a really long time.
My husband and I recently bought a house, that had always been owned by the original owner. We were told to watch out for supplemental taxes, but of course forgot about them. 6 months later, we receive a tax bill for just under $10,000!
I think the most frustrating part of this tax, besides the hefty bill of course, is that you never know when you are going to receive them! It could be a couple months, the end of the year, or even years later! It’s whenever the county processes them – and each county is different.
So, new buyers out there – watch those tax bills carefully, and budget for your supplemental taxes! Your REALTOR® can help you calculate what to expect. Since experiencing this firsthand I now know to fully caution my clients!