California's Homeowners' Exemption and Your Supplemental Tax Bill

After you get your keys, two California property tax items are worth knowing about. One can lower your taxes a little every year, and you have to claim it. The other is a bill many new owners do not expect. Both run through your county assessor and tax collector, and a few minutes now can save you a surprise later.

California's Homeowners' Exemption reduces the assessed value of your home by $7,000 when you own it and live in it as your principal residence. Your property tax is figured on the lower value, so the exemption trims your bill each year you qualify. It applies to the home you live in, not to a rental or a second home, and you can claim it on only one home at a time.

You claim the exemption with your county assessor, not with your lender or escrow. Many assessors mail a claim form to new owners after the deed records, and many let you download it or file online. Fill it out and return it promptly. To get the full exemption for a year, the claim generally needs to be filed by February 15, and a late claim filed by December 10 may get a partial exemption. Check your county assessor's website for its form, its deadlines, and whether your purchase date means the exemption can also apply to your supplemental bill. Once it is granted, the exemption usually stays in place while you own and live in the home; tell the assessor if you move out or rent the home.

When you buy a home in California, the county reassesses it as of the date ownership changed, usually at or near your purchase price. Your regular tax bill for the year was based on the old value, so the county sends a supplemental tax bill for the difference, prorated for the rest of the fiscal year, which runs from July 1 to June 30. Depending on when you closed, you may receive one supplemental bill or two. If the new value is lower than the old one, you may receive a refund instead.

The supplemental bill is usually mailed to you, the new owner, and it is often not paid through your lender's impound account, even if your regular taxes are. It has its own due dates, separate from the regular installments, and missing them can bring penalties. It can arrive months after you close. Set money aside for it, and when it comes, call your loan servicer to ask whether they will pay it or whether you should. Your regular tax bill for the first year may also still reflect the seller's value, so check with your servicer that your impound account is collecting enough going forward.

• ✓California's Homeowners' Exemption takes $7,000 off the assessed value of the home you own and live in
• ✓Claim it with your county assessor; to get the full exemption, generally file by February 15, and file promptly after you buy
• ✓You will likely get a supplemental tax bill for the change in value after your purchase, sometimes two
• ✓Supplemental bills are often not paid through your impound account, so set money aside and call your servicer
• ✓Your county assessor and the California Board of Equalization are the best sources for your situation