Wake County real estate taxes at time of sale? (calculated, taxi)
Raleigh, Durham, Chapel Hill, CaryThe Triangle Area
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The people I asked are widely-considered some of the sharpest in the business. They said the ? comes up every year, especially around this time (I guess tax bills are fresh in people's minds, and they read the part that Wake Co says "for July 1 - June 30").
The value assessed, and the lien placed, is Jan 1. That's the primary reason (it seems) why they go by calendar year.
It's not done just because it's the way they've always done it. And it's certainly not done to the benefit of the attorneys or agents.
here's a link they gave me, but I'm not into government-speak...
As noted, anyone can negotiate their contract away from the pre-printed form.
And sometimes the Buyer's get the raw end of the deal ... new construction is based off of Jan 1 value, not the completed value nor the building permit amount.
NCAR Legal shared the question with several attorneys and got back to me today with the lien placement date as the best reason, also pointing out the prorata method when acquiring the property was calculated using the same metric.
I.e., the seller who was once a buyer benefited on the front end and it is a wash on the back end.
NCAR Legal shared the question with several attorneys and got back to me today with the lien placement date as the best reason, also pointing out the prorata method when acquiring the property was calculated using the same metric.
I.e., the seller who was once a buyer benefited on the front end and it is a wash on the back end.
Mike, Thanks for researching but NC General Statutes say different, show them to the attorneys and get their response.
The tax rates are not set by the tax office but by the legislature in their annual budget before July 1 and the rate can be the same for years unless changed but the legislature in their FY Budget Bill.
The value of the property is determined on January and the most recent taxing rate established by the legislature is applied to the value for the property tax to be billed for the Jul 1 - June 30 fiscal year. If the legislature changes the tax rate prior to July 1 the tax is recalculated for the lien and billing. For FY2019 the Wake Budget adopted in June included a tax rate increase.
GS 105-285 says: The value of real property shall be determined as of January 1 of the years prescribed by G.S. and the property shall be taxed for the fiscal year of the taxing unit beginning on July 1 of the year in which it is acquired.
Wake County FY 2019 Budget approved in June increased the property tax rate:
On June 4, the Wake County Board of Commissioners adopted a $1.3 billion budget for Fiscal Year 2019, which runs from July 1, 2018, to June 30, 2019. It includes historic investments in education and housing affordability.
Does the Budget Bill increase tax?
Yes. The adopted budget will fund these historic investments in education and housing affordability with a 3.94-cent property tax increase, which will bring the county’s property tax rate to 65.44 cents for every $100 of property value. The tax increase will generate about $56.5 million in FY19.
Under this budget, a property owner will pay an extra $39 in property taxes for every $100,000 of assessed value. Therefore, the owner of a $300,000 home, for example, would pay an additional $117 in property taxes.
A Lien determined by the tax rate and property value is place on the property on January 1 for the July 1 to June 30 period so Wake County property tax Liens are placed in advance and not arrears; therefore sellers have prepaid their tax bills except for a month or two after the bill is sent and paid.
GS 105-355 says: Lien on Real Property. – Regardless of the time at which liability for a tax for a given fiscal year may arise or the exact amount thereof be determined, the lien for taxes levied on a parcel of real property shall attach to the parcel taxed on the date as of which property is to be listed under G.S. 105-285
Wake County Revenue Department operates under the statutes and publishes below on their web site:
Annual tax bills are calculated for the fiscal taxing period of July 1 through June 30. They are not
based on a calendar year. (Example: A bill issued in July 2018 would cover the period of July 1,
2018, through June 30, 2019.) Property taxes not paid in full by January 5 following billing are
assessed an interest charge of 2% for the month of January and an additional 3/4 of 1% each
month thereafter.
Being awash does not make it valid, I purchased a home on December 30, 2011 in Brunswick County NC and did not get any proration credit, with your proration method I should have received 12 months of tax credit.
Last edited by Okumuras; 08-01-2018 at 06:08 PM..
Reason: missing word
link to UNC Property Tax Bulletin sent by Bo has schedule:
January 1, 2016 - Lien for 2016–17 property taxes attaches to all real property in taxing unit. G.S.*105-355.
This means that January 2016 they placed forward Tax Liens (not arrears) on all property for FY17 to be billed in July and paid by December 31 without penalty.
The January 1, 2016 to June 30 taxes were paid by the July, 2015 billing and payment.
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Last edited by MikeJaquish; 08-02-2018 at 03:52 AM..
Q has posted that Special Counsel Robert Mueller isn't investigating Trump at all — he's really investigating Hillary Clinton, John Podesta and Barack Obama. Other theories involve familiar players in conspiracy theories such as the Freemasons and the Illuminati, while others mention The Titanic, pedophile rings in Hollywood, and the possibility that former Hillary Clinton aide Huma Abedin wears an ankle monitor. Filmmaker Francis Ford Coppola, the Rothschild family and Satan also make appearances in discussions."
2. Lewis Carroll's "Jabberwocky": "`Twas brillig, and the slithy toves
Did gyre and gimble in the wabe:
All mimsy were the borogoves,
And the mome raths outgrabe."
Sorry guys, I get a bit carried away with this, my OCD.
However, found the NC General Statute for taxing by Counties and it is for the fiscal year, not calendar year so I don't know why the standard Offer to Purchase contract has CY in it which really confuses the settlement attorneys. As such if seller is a prompt bill payer he has prepaid taxes for most of the year and should be receive prorated credit for the prepaid period that becomes the buyer's responsibilty. Here is the first part of the statute:
G.S. 105-360 Page 1
§ 105-360. Due date; interest for nonpayment of taxes; discounts for prepayment; interest on overpayment of tax.
(a) Taxes levied under this Subchapter by a taxing unit are due and payable on September 1 of the fiscal year for which the taxes are levied. Taxes are payable at par or face amount if paid before January 6 following the due date. Taxes paid on or after January 6 following the due date are subject to interest charges. Interest accrues on taxes paid on or after January 6 as follows:
(1) For the period January 6 to February 1, interest accrues at the rate of two percent (2%).
(2) For the period February 1 until the principal amount of the taxes, the accrued interest, and any penalties are paid, interest accrues at the rate of three-fourths of one percent (3/4%) a month or fraction thereof.
The "system" is too entrenched to change to "fiscal year proration" so we need to educate property sellers to change the contract before selling, here is my education piece:
If the buyer uses the standard NC Real Estate Offer to Purchase Contract be careful with paragraph 9a of the contract. It says proration of property taxes between buyer and seller will be done on a Calendar Year basis, unless otherwise provided, so you could gift up to 18 months of taxes to the buyer depending on the date of sale. Closing attorneys representing the buyer use paragraph 9a to charge the seller for taxes from January 1 to the date of sale even though you have already paid those taxes and then not give you credit for taxes you have prepaid to June 30 of the next year.
All of North Carolina’s counties and municipalities are required by General Statute to tax property on a July 1 to June 30 Fiscal Year basis, tax lien bills issued in July are due in September for the Fiscal Year. Therefore, remember to “otherwise provide” by crossing out paragraph 9a, replace it with proration on a Fiscal Year basis and have it initialed. Without change, once you sign there is no recourse, no fair play. The purpose of proration is to proportionately and fairly allocate costs and credits where they are due, however it is not happening in NC for most closings.
Until the contract boiler plate is changed by the NC Association of Realtors the only recourse now is for sellers or seller agents to realize they are being shorted thousands of dollars and make the change themselves.
It is a given fact that all 100 NC Counties tax property on a July 1 to June 30 Fiscal Year basis since it is required by NC Statute; however, there is also a conflicting state statute that says: "Unless otherwise provided by contract, …" property taxes shall be prorated on a Calendar Year basis for a sale. So it is up to the smart seller to modify para 9a in the NC Offer to Purchase Contract (OTP) for proration on a Fiscal Year basis (probably 1% of smart sellers modify para 9a or insist on a proper proration at closing).
If more sellers catch and correct the error they might rescind the conflicting Statute and remove Calendar Year proration from the OTP. So if you sell, be wise and "Provide otherwise by contract" by modifying para 9a to "Fiscal Year proration" to match the real property taxing schedule and have it initialed by you and the buyer to save yourself a bundle. Otherwise you will be debited for taxes you have already paid from January 1 to the date is sale and not be credited for taxes you have prepaid from the date of sale to the end of the Fiscal Year that has become the responsibility of the buyer.
Please share this info with your NC friends and if enough sellers correct the error, the legislature might rescind the conflicting statute and OTP might use a boiler plate for Fiscal Year proration.
It is a given fact that all 100 NC Counties tax property on a July 1 to June 30 Fiscal Year basis since it is required by NC Statute; however, there is also a conflicting state statute that says: "Unless otherwise provided by contract, …" property taxes shall be prorated on a Calendar Year basis for a sale. So it is up to the smart seller to modify para 9a in the NC Offer to Purchase Contract (OTP) for proration on a Fiscal Year basis (probably 1% of smart sellers modify para 9a or insist on a proper proration at closing).
If more sellers catch and correct the error they might rescind the conflicting Statute and remove Calendar Year proration from the OTP. So if you sell, be wise and "Provide otherwise by contract" by modifying para 9a to "Fiscal Year proration" to match the real property taxing schedule and have it initialed by you and the buyer to save yourself a bundle. Otherwise you will be debited for taxes you have already paid from January 1 to the date is sale and not be credited for taxes you have prepaid from the date of sale to the end of the Fiscal Year that has become the responsibility of the buyer.
Please share this info with your NC friends and if enough sellers correct the error, the legislature might rescind the conflicting statute and OTP might use a boiler plate for Fiscal Year proration.
It is a given fact that all 100 NC Counties tax property on a July 1 to June 30 Fiscal Year basis since it is required by NC Statute; however, there is also a conflicting state statute that says: "Unless otherwise provided by contract, …" property taxes shall be prorated on a Calendar Year basis for a sale. So it is up to the smart seller to modify para 9a in the NC Offer to Purchase Contract (OTP) for proration on a Fiscal Year basis (probably 1% of smart sellers modify para 9a or insist on a proper proration at closing).
If more sellers catch and correct the error they might rescind the conflicting Statute and remove Calendar Year proration from the OTP. So if you sell, be wise and "Provide otherwise by contract" by modifying para 9a to "Fiscal Year proration" to match the real property taxing schedule and have it initialed by you and the buyer to save yourself a bundle. Otherwise you will be debited for taxes you have already paid from January 1 to the date is sale and not be credited for taxes you have prepaid from the date of sale to the end of the Fiscal Year that has become the responsibility of the buyer.
Please share this info with your NC friends and if enough sellers correct the error, the legislature might rescind the conflicting statute and OTP might use a boiler plate for Fiscal Year proration.
You're confused. Property tax rates are indeed set for July 1 through June 30. However, property taxes are billed in September for the period January 1 through December 31. Thus, if the tax rate is raised as of July 1, the taxpayer gets a "break", as taxes for the year are based on the rate in effect as of January 1 prior to June 30. Thus, the "error" is on the taxpayer's favor. If the tax rate stays the same, then there is no "error".
Hope that helps.
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