Prepare for the unexpected by understanding supplemental property tax.
Have you ever received an unexpected bill in the mail after buying or selling a property? We understand how unsettling that can be. Today, we’re here to shed some light on a common type of post-transaction bill: the supplemental property tax bill.
Unlike the joy of receiving a refund check or a birthday card with money, bills in the mail can be quite the opposite. There are various types of bills, but the ones we’re discussing today are those you weren’t anticipating, especially after a real estate transaction.
Let’s start with buyers. You may encounter what’s known as a supplemental property tax bill. This bill is typically more significant when the previous owner held the property for a long time, resulting in lower property taxes. However, when you purchase the property at a higher price, there’s a gap between the old tax basis and the new one.
This gap prompts the issuance of a supplemental tax bill to cover the difference, which may arrive in your mailbox months or even years after the purchase. Your offer might mention supplemental property taxes, giving you a heads-up.
To avoid surprises, you can use a supplemental tax estimate available on the assessor’s website to gauge whether you might receive such a bill.
Now, let’s switch to sellers. While it’s less common, sellers can also encounter a specific type of bill. In cases where a property owner has passed away, you might receive an unsecured property tax bill. This occurs due to the shift in ownership that takes place upon the owner’s death.
The property’s beneficiaries or the trustee effectively become the new owners, and the property is reassessed at its current value. This reassessment can lead to an unsecured supplemental property tax bill to cover the gap between the date of death and the sale of the property.
“When selling a property, it’s essential to communicate with your CPA.”
To avoid being caught off guard by these bills, it’s crucial to plan ahead. Estate planning attorneys and CPAs often recommend having a reserve account to cover potential surprises during the settlement of an estate. Consulting with these professionals can help you determine the likelihood of receiving an unsecured supplemental property tax bill and ensure you’re financially prepared if it happens.
While we aren’t CPAs or estate planning attorneys, we can provide guidance and work alongside these professionals to address your concerns. When selling a property, it’s essential to communicate with your CPA and estate planning attorney to stay informed and prepared for any unforeseen bills in the future.
By taking these steps, you can navigate the world of real estate transactions more confidently and avoid any unexpected financial surprises down the road. Remember, if you have any questions about property taxes or real estate in general, please feel free to reach out to me by phone or email. I would be happy to serve as your resource for all of your real estate needs.
