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Why do taxpayers overpay on their property tax?

Posted by: raindrop 7 years, 9 months ago


November 1st is almost here, which means property taxes are due! We know, we know, you can hardly contain your excitement.

We get it, but we are have seen some cases where property owners are paying too much in property tax. According to the San Diego County Treasurer Tax Collector, these are the main reasons taxpayers overpay on property taxes:

    • Taxpayers send payments not realizing that they have an impound account with their lender and the lender has already paid the taxes
    • Taxpayers send payments not realizing that taxes may have been paid during the escrow process due to refinance or purchase of the property
    • The assessed value of the property is reduced after the taxes were paid at a higher value
    • Taxpayers pay an incorrect amount due to transposition of numbers
    • Calculation error

           The two main reasons we have seen recently are taxpayers not realizing they have paid some of their property taxes through escrow, and taxpayers paying property tax on a property with a previously higher assessed value.          

           When a buyer purchases a home, escrow prorate taxes.  Many new homeowners do not realize they have already paid their portion of the property tax, and end up repaying it. 

           A home's value is assessed on January 1st of the previous year.  So if a Buyer purchases a home in an improving market, homeowners will receive a supplemental tax bill for the additional property taxes owed based on the new sales price.  In subsequent years, the new tax bill will be based on the assessed value, within Prop 13 guidelines.  However, given that the market has been declining, may new homebuyers end up overpaying their first tax bill, because it is based on the previously assessed value.  In the following January, the home will be reassessed with the tax collector, and they will receive a reimbursement for the overpayment.

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