How do you feel about taxes? Yeah, I hate them, too. I actually
hate everything about them.
Because Realtors are independent contractors operating under the
aegis of a Broker of Record, we are responsible for itemizing all
our business expenses. What a nightmare! Okay, first of all I’m
expected to remember what I did each day for last year. What? I
don’t even remember what I had for lunch last week. And receipts. I
am supposed to keep all those little pieces of paper and write down
who and where and what and why on each one. Recently many stores,
banks and restaurants have switched to a different type of paper
and type and the darn receipts actually disappear over time. Have
you noticed that? So I have a bunch of blank papers in my receipt
shoe box.
How do you feel about taxes? Yeah, I hate them, too. I actually hate everything about them.
Because Realtors are independent contractors operating under the aegis of a Broker of Record, we are responsible for itemizing all our business expenses. What a nightmare! Okay, first of all I’m expected to remember what I did each day for last year. What? I don’t even remember what I had for lunch last week. And receipts. I am supposed to keep all those little pieces of paper and write down who and where and what and why on each one. Recently many stores, banks and restaurants have switched to a different type of paper and type and the darn receipts actually disappear over time. Have you noticed that? So I have a bunch of blank papers in my receipt shoe box.
Of course, that’s only income tax. There are also property taxes. And in July of 1983 then-Governor George Deukmejian signed into law the Supplemental Real Property Tax legislation which produces over $400 million per year in revenue to California schools.
Supplemental property taxes impact individuals who are buying property or building new construction. When the purchase or construction is complete, the new owner gets hit with- er, I meant to say receives – a bill for supplemental taxes.
How much will this bill be? The supplemental bill is based on the new valuation of the property and the length of time until the next full tax bill comes. In essence, it is the difference between the old tax rate and the new tax rate prorated over the amount of time the new owner has been in possession up until June 30, the end of the tax year. Therefore, if you happen to close escrow July 1, there will be no supplemental tax because you just enter the new tax roll at the new rate.
If you do not close on that date, you should be looking for a bill to arrive sometime. What do I mean, sometime? Just what I said: Sometime. Depending on the workloads of the County Assessor, the County Controller/Auditor and the County Tax Collector, it could be as soon as three weeks or many months later. You can usually count on it arriving in your mailbox at the worst possible time, like when your car’s engine has just blown up or your daughter has announced she’d like a huge wedding in two months. Like I said: Sometime.
Unlike the property taxes, the supplemental property taxes are not prorated in escrow because it is a one-time tax. This tax is fully the responsibity of the new property owner, but it may be paid in two equal installments. The taxes are due on the day the bill is mailed, but delinquent on specified dates. If the bill is mailed between July and October, the first installment becomes delinquent on December 10 of that year and the second installment becomes delinquent on April 10 of the following year. If the bill is mailed between November and June, the first installment becomes delinquent on the last day of the month following the mailing, and the second installment becomes delinquent on the last day of the fourth calendar month following the date the first installment became delinquent. Clear as mud? I thought so.
The moral of this story is just know you will need to put aside some money for the taxes when you buy a new home. And the longer the previous owner owned the home, generally the higher the differential will be between what they were paying and what you will be, so you’ll need to pay a higher supplemental tax bill.Enough on taxes already. Let’s take a look at what’s new on the real estate scene. You probably noticed that a mysterious screen went up around what used to be a mattress store on San Benito Street. A flurry of activity occurred behind the screen. It has been removed and Voila! You can see the new home of Nino Construction and Nino Realty. They have done a fabulous job renovating the building. The greatest compliment I can pay it is to say it looks like it has been there forever. The architecture and finishes and colors give a touch of history and charm to the streetscape. When they are ready to have visitors, you’ll want to make a point of stopping in to say hello. They are a great addition to the downtown marketplace.
The real estate market remains as it has been for the past month. The inventory is just over 200 in San Benito County, and 322 in south Santa Clara County. There were 49 new listings in Santa Clara, 29 in San Benito. The time on the market continues to lengthen, though there are still buyers looking. If you want more information about the market, call your Realtor.
And be kind to your Realtor!
