A supplemental assessment is the interim property tax adjustment issued after a change in ownership or completion of new construction, covering the portion of the fiscal year between the event and the next annual assessment.
When property ownership changes mid-year, the buyer receives a supplemental tax bill covering the increase in assessed value from the date of transfer to the next annual assessment date (July 1). The supplemental bill is in addition to the normal annual bill based on the old assessed value.
LA multifamily buyers routinely receive supplemental assessments 3–12 months after acquisition. Budget for this — it's a real line-item cost in the first year of ownership. Sellers sometimes negotiate supplemental tax prorations in the PSA, but standard practice is buyer bears post-close supplementals.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
Thinking about selling? Get a no-obligation evaluation from a broker with $1.41 billion across 254 closed LA multifamily transactions.
Request Free Evaluation →