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I am purchasing condo and closing completing around Jan 2014 this month. However in escrow doc shows property tax for 2013-2014 is incurred to me during which I did not own the property. Does it sound right??? Why?
Check that carefully.
Taxes are paid ahead of time and during closing the seller is given credit back for the portion that will cover when you do own the house
I guess it would be important to look into exactly how taxes are paid wherever a person is doing a transaction, because in my case, taxes are paid in arrears, and, because (when I bought) the title company underestimated what the taxes would turn out to be (they used the previous year's taxes to estimate what taxes would be for the year in which the sale took place, and this estimate turned out not to be high enough because values were rising at that time), I wound up paying more than I should have. (When taxes came due after I took possession, the amount the seller had credited to me at closing was not enough to cover what taxes for his portion of the year turned out to be, and so--by paying the tax bill in full--I wound up paying not only what I had been credited but also the difference between what I'd been credited and what was owed for his portion, as well as of course paying for my portion of the year.)
Last edited by City__Datarer; 01-12-2014 at 05:22 AM..
OP, check the closing statement to see if there is a corresponding amount in one of the columns on the seller's side. Closing statements can be tricky to figure out if the amounts being credited aren't in side-by-side columns.
CDer, in Florida, both parties usually sign a statement at closing stating that if the amount estimated is incorrect they agree to pay the difference to the other party when the tax bill arrives. For closings early in the year the amount of difference is usually insignificant but for a summer to early fall closing, it can amount to a chunk of change. It's up to the shorted party to go after it. I think a lot of people forget to check by the time the tax bill arrives in November (in Florida).
This is all years back that I bought and sold that condo, and I understand a bit more now (just a bit ) than I did then. Hopefully what you've posted can help others who are buying now. (I also know enough now, but not then, to wonder why they were even using previous year's taxes when by the time of year when the closing took place, even though the actual bill would not yet have been mailed out, the TRIM notice stating at least the possible range of taxes--and making clear that there would be a notable increase, even if the exact amount was in question--would have already been received by the seller and have been a matter of public record...)
Little things like this (and unfortunately by no means limited to this) are why I pester you guys on City-Data with questions to try to understand as much as I can, and do appreciate all the great info people provide here!
I am purchasing condo and closing completing around Jan 2014 this month. However in escrow doc shows property tax for 2013-2014 is incurred to me during which I did not own the property. Does it sound right??? Why?
It sounds right, generally you pay for your taxes in advance and if you bought it for more than the last guy, you might have to pay more later if they used the last guy's taxes as an estimate. Your loan person should have explained this to you, unless they they tried to avoid talking about it so they can make their closing cost sound lower and not scare you away since you are a first time buyer.
Quote:
Originally Posted by City__Datarer
why
It is not rocket science, "they" could easily figure out what your taxes would be, but they are probably working with an old computer system from the 70s that no one knows how to change.
i also posted same question in zillows and it appears 2013-2014 period covers 2013 July to 2014 July. Since I am the owner starting 2014 Jan, this seem to be the reason. I looked through bill and that is what the exact tax period says. If that is so, it seems reasonable to me. What do you think? Thanks,
i also posted same question in zillows and it appears 2013-2014 period covers 2013 July to 2014 July. Since I am the owner starting 2014 Jan, this seem to be the reason. I looked through bill and that is what the exact tax period says. If that is so, it seems reasonable to me. What do you think? Thanks,
That's the same time period covered by Summer tax bills in Michigan (July 1 to June 30). Tax proration is an easy thing to do and you should always check what's on the closing statement. Simply divide the tax bill by 365 to get the daily tax. Multiply that by the number of days (in your case) between your closing date and June 30. That will give you the amount of prorated tax that you will owe.
Note: Some closing agents prorate taxes based upon a 30-day month. I hate that way because I like to be precise.
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) than I did then. Hopefully what you've posted can help others who are buying now. (I also know enough now, but not then, to wonder why they were even using previous year's taxes when by the time of year when the closing took place, even though the actual bill would not yet have been mailed out, the TRIM notice stating at least the possible range of taxes--and making clear that there would be a notable increase, even if the exact amount was in question--would have already been received by the seller and have been a matter of public record...)
