The SF Supplemental Property Tax Bill: Why You Owe More

The envelope from the Treasurer and Tax Collector is real, it is not a mistake, and your lender is not going to pay it. A supplemental property tax bill is the catch-up for the months between your closing and the first regular bill computed at your purchase price. For most San Francisco buyers it lands six to twelve months after recording and runs from a few thousand dollars to five figures. Here is how it is calculated, why some people get two, what your impound account does and does not cover, and the other year-one bills that arrive in the same season.

Your purchase reset the assessed value

Under Prop 13 a home is reassessed to market value when it changes hands, and market value is almost always your purchase price. The seller may have been paying tax on a value set decades ago and grown at no more than 2% a year. The moment your deed records, the Assessor begins the work of replacing that number with yours.

The regular bill for the fiscal year, which runs July 1 to June 30, was already computed on the seller's value. The supplemental assessment covers the gap for the part of the year you own the home. The Assessor mails a notice of supplemental assessment, typically months after recording, and the Treasurer and Tax Collector follows with the bill.

The rate is the same one on every SF bill: $1.18268325 per $100 of assessed value for fiscal year 2025-26, or 1.1827%, up from 1.1714% the year before. That is the 1% Prop 13 base plus voter-approved debt. The Board of Supervisors adopts a new rate each September, so the bill you receive will use the rate for the year it covers.

How the proration works, and why you may get two bills

The formula is simple: (your purchase price minus the seller's assessed value) multiplied by the tax rate, multiplied by a proration factor for the months left in the fiscal year after the month you closed.

The second bill exists because the regular roll for the next fiscal year is fixed on January 1, the lien date. Close in March and the Assessor has already set next year's regular bill at the seller's value, so a second supplemental covers that entire year too.

A worked example at the 2025-26 rate: you pay $1,400,000 and the seller's assessed value was $700,000. The $700,000 difference at 1.1827% is about $8,280 for a full year. Close in October and the factor is 0.67, so one bill of roughly $5,550, in two installments. Close in March instead and you owe about $2,070 for the rest of the current year plus a second bill of about $8,280 for the next year, roughly $10,350 on top of the regular bills. If you paid less than the seller's assessed value, the supplemental is negative and the city refunds you.

Confirm the factors with the Assessor's supplemental tax estimator; the true cost of owning shows how to budget for the number before you close.

Impound accounts do not pay it, and the first-year shortage

If your lender collects taxes and insurance monthly, the servicer pays the regular secured bill from that account. It does not pay the supplemental bill. The Assessor's own guidance for new owners says so plainly, and the reason is mechanical: the servicer set your impound at closing using the only bill that existed, the seller's, and the supplemental is a separate one-time bill addressed to you.

Expect a second effect. Federal rules require an annual escrow analysis and cap the cushion a servicer may hold at two months of payments. When the first regular bill at your new value arrives, the analysis shows a shortage, and the servicer will offer to collect it over twelve months or take a lump sum, while raising the monthly deposit going forward. California law also limits when a lender may require impounds on an owner-occupied home, which is why some SF borrowers waive them and pay the bills themselves.

Due dates, penalties and how to pay

Supplemental bills run on their own calendar, set by state law from the month the bill is mailed:

• Mailed July through October: the first installment is delinquent after December 10 and the second after April 10, matching the regular bill.
• Mailed November through June: the first installment is delinquent on the last day of the month after mailing, and the second installment four months later.

The exact dates are printed on the bill. A late installment carries a 10% penalty, the second adds a collection cost, and unpaid amounts accrue redemption penalties after June 30. Pay online, by mail or in person through the Treasurer and Tax Collector, and calendar the second installment the day you pay the first.

Regular bills after year one

From your second fiscal year, you are on the normal cycle:

The bill is your assessed value (purchase price, growing at most 2% a year) times the year's rate, plus fixed-dollar lines: school and community college parcel taxes, special assessments and voter-approved bonds. Those fixed lines do not scale with your purchase price, so a lower-priced condo and a high-priced house pay the same parcel tax. Several carry exemptions for owners 65 and older; the homeowner exemption article covers them along with the $7,000 exemption every owner-occupant should claim.

Checking the Assessor's math

The notice of supplemental assessment shows the prior assessed value, your new value, the difference and the proration. Check three things:

• The new value should equal your purchase price in an open-market sale. If it is higher, the Assessor may have concluded the price did not reflect market value, which is rare for an arm's-length SF sale and worth a phone call.
• The prior value should match the seller's last bill, which you saw in the disclosure package or the preliminary title report.
• The event date should be your recording date, not your contract date.

If the value looks wrong, call the Assessor first. If that does not resolve it, you have 60 days from the notice date to file an application with the Assessment Appeals Board, a shorter window than the regular September 15 deadline. Appealing your assessment explains both routes.

The other year-one surprises

The supplemental bill tends to arrive alongside two other letters.

The first insurance renewal. The premium you bought in escrow was a quote; the renewal is a repricing. The California FAIR Plan's approved dwelling rate increase, 29.1% on average, took effect October 15, 2026, and State Farm received a 17% interim increase in 2025; check current figures. Re-quote the policy every year rather than accepting the renewal; insurance and maintenance walks through it.

HOA budget season. Condo boards adopt next year's budget in the fall, and SF dues have climbed sharply in recent years, with the metro area's median monthly HOA payment reported at about $500 in 2025, driven by master-policy insurance, SB 326 balcony inspections and lender pressure on reserves. Read the budget and reserve study when they arrive and attend the meeting; an assessment proposed in November is cheaper to question than one levied in January.

Budgeting for the cycle

Once the supplemental is paid, the ongoing number is predictable. Multiply your purchase price by the current rate, divide by twelve, add a monthly share of the parcel-tax lines on your last bill, and set that aside if you have no impound account; assume the assessed value climbs 2% a year and the rate drifts. Keep the paid supplemental bill and both installment stubs with the closing package you filed after recording: property tax, including supplemental tax, is deductible when paid, subject to the SALT cap.