One key difference between renting a house and buying one is that when you own a house, you are responsible for paying property taxes on it. In most areas, people pay their property taxes twice each year, and when you buy a house, this part of the deal can often confuse people. If you are buying a house and want to figure out how property taxes work and what proration means with them, here are several things you should know about this when buying a house.
The seller is responsible for the taxes until the day of closing
Property taxes are taxes paid on all types of properties, including houses, and they are typically paid the year after they accrue. For example, the property taxes from 2017 for a house are due in the year 2018, and they are usually paid in two separate payments. The first half of the 2017 taxes might be due in May of 2018, while the second payment might be due in November of 2018. The person selling the house will be responsible for paying all the property taxes up until the day the house closes, and the buyer will take over the responsibility of these property taxes from the day of closing.
The seller must reimburse you for the taxes at closing
At the closing of the house you are buying, the title company will determine how much the seller owes for the taxes up until this day. Instead of paying these taxes before they are due, the title company will simply credit the buyer of the house the amount that the seller owes until this date. Because of this, you should receive a credit on your closing documents that reflects the total amount of taxes owed until this day.
You will then have to pay the tax bill when it comes due
After you close on the house, you will then be responsible to pay for the property taxes, starting with the first payment due that year, because you received the money for these taxes in the form of a credit for prorated taxes.
Understanding how prorated property taxes work is important if you are buying a house, simply so that you understand what your responsibilities are with this and to make sure you get the right amount credited to you at closing. To learn more about property taxes in house closings, talk to your realtor.
Share1 October 2018
When I started looking for a new home, I realized that there were a few things I needed to be careful about. For instance, I really needed to focus on finding a home that would appreciate in value, so I began thinking about investing in the right property. After quite a bit of research, I was able to find a great neighborhood that had a big support system for my family. After we found a house we loved, we worked with a real estate agent to procure it, and it was really nice to feel like we belonged somewhere. Read this blog about ways to find amazing pieces of real estate the first time around.