Prop 13 and the supplemental tax bill after you buy in LA

If you're buying in Los Angeles from another state, California's property tax system works differently from what you may be used to. It's generally predictable once you understand it, but there's one piece that catches a lot of new owners off guard: the supplemental tax bill.

This is general information, not tax advice. Rates, rules and timing can vary by property and change over time. Verify the specifics for any home with the LA County Assessor, the LA County Treasurer and Tax Collector, and a qualified tax professional.

How Prop 13 works

Proposition 13, approved by California voters in 1978, shapes almost everything about property taxes here. In general terms:

• Your purchase sets the value. When a property changes ownership, the Assessor generally sets a new assessed value based on the purchase price. What the previous owner paid, or what their tax bill was, generally doesn't carry over to you.
• The base rate is 1%. The general property tax is limited to 1% of assessed value. On top of that, most bills include voter-approved bonds and other charges. In LA County, total rates commonly land somewhere a bit above 1%, often in the range of about 1.1% to 1.3%, depending on the location. Some areas also have special assessments listed separately on the bill.
• Increases are capped. After you buy, your assessed value can generally rise by no more than 2% a year, as long as there's no change of ownership or new construction. Adding a room, an ADU or a pool can add to the assessed value for that new construction.

That's why two similar houses on the same street can have very different tax bills. One owner may have bought decades ago, and the other last year.

The supplemental bill

Here's the part that surprises people. Regular property tax bills in California are based on the value as of January 1 each year, for a fiscal year that runs July 1 to June 30. When you buy in the middle of that cycle, the regular bill for the year still reflects the previous owner's assessed value.

To make up the difference, the county generally issues a supplemental tax bill. It covers the difference between the old assessed value and your new one, prorated for the remaining months of the fiscal year. Depending on when you close, you may receive one supplemental bill or two. Purchases that close between January 1 and May 31 commonly generate two, because the next year's regular roll has already been set.

A few things to know:

• It can arrive months after closing. It isn't unusual for the bill to show up well after you've moved in.
• It usually comes to you, not your lender. Even if your lender collects property taxes through an impound account, supplemental bills are often mailed directly to the owner. Check with your lender how they handle it.
• It has its own due dates. They're printed on the bill and are separate from the regular installment dates.

A simple example

This is a hypothetical, with rounded numbers, just to show how the math generally works:

• The previous owner's assessed value was $600,000.
• You buy the home for $2,000,000.
• The difference is $1,400,000. At a hypothetical total rate of 1.2%, that's about $16,800 a year.
• If about half the fiscal year remains after your purchase, a supplemental bill for roughly $8,400 might follow.

Your actual bill depends on the Assessor's determination, the exact dates, and the rate for that specific property. The Assessor's website has more detail on how supplemental assessments are calculated.

Regular bills and the calendar

In LA County, regular secured property tax bills are generally paid in two installments. The first is due November 1 and becomes delinquent after December 10. The second is due February 1 and becomes delinquent after April 10. Confirm current dates with the Treasurer and Tax Collector.

Small things worth doing

• Look up the homeowners' exemption. If the home is your primary residence, California offers a homeowners' exemption that reduces the assessed value by $7,000. It's modest, but it's generally available only if you file. The Assessor's site explains how.
• Budget from your price, not the listing's tax history. Online listings often show the previous owner's taxes, which can be far lower than yours will be.
• Set aside for the supplemental bill. Many new owners put money aside at closing so the bill isn't a surprise.

Where to learn more

The California State Board of Equalization publishes general guides to property tax, and the LA County Assessor and Treasurer and Tax Collector have tools for looking up specific parcels and bills. For how property taxes fit into the bigger picture of buying here, see our guide to buying in LA from out of town.