The following dates should be useful in determining how you will handle the proration of unsegregated taxes for your project:
- January 1
- Assessment date. Taxes become a lien not yet due a payable for the Fiscal Tax Year starting July 1st. This is also the valuation date for new construction. If a subdivision map or condominium plan has not recorded by this date, the tax bill will not be segregated when issued in October and an estimate will be required. You should also note the status of construction of your project as of this date. If the value of the improvements is not already showing on your bill, you should expect a reassessment. The Assessor will likely use a cost approach for their appraisal which will include soft and hard cost and standard measures for construction.
First sale occurring between January 1st and October 1st: You will need to determine if segregated bills will be issued based on when the map or condominium plan recorded. In addition, you will need to estimate what the bill will be and collect from the buyer an amount sufficient to cover their portion of any unsegregated bill. The bill will be sent to the property owner as of January 1st, which may be you. It will be your obligations to pay both installments of any unsegregated bill and to forward any segregated bills you receive to the appropriate owners. See the 'Estimating Future Unsegregated Taxes' of this section for various methods of estimating and paying unsegregated taxes.
- 2nd installment regular taxes are due.
- 2nd installment regular taxes last day to pay without penalty.
- Fiscal tax year begins. Taxes are due after this date but not yet known or payable. Even if taxes will be segregated for this new fiscal year, an estimate will be required for closings from now to when the bill is issued in October. The Assessor can now advise if the taxes will be segregated and provide the valuations being used for the upcoming bill(s). This will be helpful for determining your estimate or confirming the estimate you are using.
Sales occurring after July 1st: Your estimate will now be prorated between you and the buyer.
- Sometime during the month, regular tax bills should be received.
For first sales occurring after October 1st, you should be able to prorate based on the actual bill provided it correctly reflects the value of the project as of January 1st.* If you had sales and were using an estimate, escrow should now use the actual bill amount. Prorations will still be from the close of escrow through June 30th of the following year. The Assessor will be obligated to complete the segregation of taxes for the next year.
If segregated bills are issued when an unsegregated bill was expected, buyers should be sent their bills along with a refund of the estimate that was collected from their funds.
- 1st installment regular taxes are due.
- 1st installment regular taxes last day to pay without penalty. If paying unsegregated taxes, both installments should be paid.
*Although actual tax amounts should be able to be used for proration purposes after the bill is received in October, the following situations could mean the bill is too low and the receipt of an Adjusted, Escaped or developer's Supplemental Bill is probable. In these cases an estimate of future taxes should still be used:
- The bill is not in the name of the developer, indicating the probability of a future Supplemental. This will happen if you have had a change in ownership after January 1st. If this is the case, you should estimate the amount of the supplemental and prorate accordingly.
- The value of the property does not reflect the value of the completed improvements as of January 1st. If this is the case, you should contact the regional office of the Assessor to see what adjustments they are planning to make before they complete the segregation.