Another Property Tax question New Build

[Angel Dear]

Hi!
Good morning I have a silly question. We closed on our new home in Texas at the end of June. It is now October and the dreaded tax statement has came in the mail.
Who is responsible for paying the taxes for the entire year? The lender DID give us a credit on the unimproved taxes from Jan-June and that’s what we’ve been paying since we’ve moved in.
I’m just trying to wrap my head around the fact we have to pay an entire years worth of taxes when we’ve only lived here for 6 months, even if the home was assessed recently (I do not know when it was done for sure). Should the county have only billed us for those 6 months or is that how taxes work? Lol obviously a newbie here, just making sure we don’t over pay if need be. We’re we taken advantage of by the lender? My DH wants to blame the lender but I feel they aren’t obligated to owe us anything, at least they paid the land tax. Or should they have offered to pay taxes based off the cost of the home? I’ve read somewhere that some lenders will do that but we never asked and they never offered.
Any insight would be fabulous thank you very much

[El Chingaso]

That first year tax statement on a new build is always fun. You're responsible for them. That credit the lender gave you was the proration of that tax bill.

[Angel Dear]

Thanks! That’s what I thought.

[jackmichigan]

Does your monthly mortgage payment include a portion for paying taxes and insurance? If the servicer of your loan is holding an escrow account to pay the taxes, you may need to determine if there is enough in the account to pay the tax bill (which they would need to receive). If your loan is set up so that you pay for taxes and insurance separately, then you'll need to pay the tax bill.

Assessments and property taxes are handled differently in different states, so you may need someone from Texas to weigh in on your situation. (Some property taxes are paid for the year going forward, some are paid in arrears.) In any case, the taxes are not a liability on the lender--they only pay it on behalf of the appropriate party.

[kab0906]

Exactly. Our last house payment included withholding for yearly taxes. Your tax notice should say something about that, or ours did in Florida, not sure if your state is the same.

[Pfhtex]

Originally Posted by Angel Dear

Hi!
Good morning I have a silly question. We closed on our new home in Texas at the end of June. It is now October and the dreaded tax statement has came in the mail.
Who is responsible for paying the taxes for the entire year? The lender DID give us a credit on the unimproved taxes from Jan-June and that’s what we’ve been paying since we’ve moved in.
I’m just trying to wrap my head around the fact we have to pay an entire years worth of taxes when we’ve only lived here for 6 months, even if the home was assessed recently (I do not know when it was done for sure). Should the county have only billed us for those 6 months or is that how taxes work? Lol obviously a newbie here, just making sure we don’t over pay if need be. We’re we taken advantage of by the lender? My DH wants to blame the lender but I feel they aren’t obligated to owe us anything, at least they paid the land tax. Or should they have offered to pay taxes based off the cost of the home? I’ve read somewhere that some lenders will do that but we never asked and they never offered.
Any insight would be fabulous thank you very much

This question is better posed to your Title Company Closer than the lender. Lenders tend to use the Millage Rate to project what the taxes will be, but then again, there is a wide disparity in whether every lender does this, and if so, how they reach the quotient.

[Okey Dokie]

I’m in Missouri, not Texas, but this is how it’s done here. When the Certificate of Occupancy is issued, the assessor reassesses the property to the “improved” rate, and the taxes are figured on the “improved rate” from the COO date and the unimproved rate for the period prior.

Example: taxes are from January 1 to December 31. The unimproved taxes were $120/year. The taxes with improvements are $3600 a year. Certificate of Occupancy dated May 1. Taxes will be 4 months @ $10 month and 8 months @ $300/month, for a total of $2440 for the first year, $3600 in subsequent years. In this example, the buyer would have gotten $40 credit for taxes at closing.

OP better hope that tax escrow is being figured at something higher than $120/year. My experience has been they OVER estimate the first years’ taxes and you end up with a nice escrow refund.

[Angel Dear]

Yeah they are taking out insurance and tax but it’s the tax on the unimproved. We have the money to pay the taxes, they told us our payment would go up next year to put aside the proper amount for the actual amount with the house added on. We just weren’t sure if we are supposed to pay for the months we didn’t live in Jan-June. The tax statement is showing us for the entire year (2019). Shouldn’t our numbers be a lot lower? The bill is presenting us for improved but for the entire year. It wasn’t “improved” until just recently. Once a house is added on as improved do they charge for the whole year? I know it’s confusing I’m trying my best to explain our situation.

[Angel Dear]

Originally Posted by Okey Dokie

I’m in Missouri, not Texas, but this is how it’s done here. When the Certificate of Occupancy is issued, the assessor reassesses the property to the “improved” rate, and the taxes are figured on the “improved rate” from the COO date and the unimproved rate for the period prior.

Example: taxes are from January 1 to December 31. The unimproved taxes were $120/year. The taxes with improvements are $3600 a year. Certificate of Occupancy dated May 1. Taxes will be 4 months @ $10 month and 8 months @ $300/month, for a total of $2440 for the first year, $3600 in subsequent years. In this example, the buyer would have gotten $40 credit for taxes at closing.

OP better hope that tax escrow is being figured at something higher than $120/year. My experience has been they OVER estimate the first years’ taxes and you end up with a nice escrow refund.

Thank you for responding! I appreciate it.
I guess I’ll lay out the numbers, out statement came in and it’s for $6,700 for all of 2019. Before it became improved our taxes were only $64 a month based off the land. Nobody set up our escrow to take extra out but we do have the cash in the bank to cover the tax bill-but before we pay that’s why we had this question looming over us-why should we pay for Jan-June 2019 when we closed on June 30th. Yes the lender credited us for the first 6 months but it was only for the unimproved.
Sorry if my words are confusing. But I appreciate the feedback.

[jackmichigan]

Originally Posted by Angel Dear

Yeah they are taking out insurance and tax but it’s the tax on the unimproved. We have the money to pay the taxes, they told us our payment would go up next year to put aside the proper amount for the actual amount with the house added on. We just weren’t sure if we are supposed to pay for the months we didn’t live in Jan-June. The tax statement is showing us for the entire year (2019). Shouldn’t our numbers be a lot lower? The bill is presenting us for improved but for the entire year. It wasn’t “improved” until just recently. Once a house is added on as improved do they charge for the whole year? I know it’s confusing I’m trying my best to explain our situation.

Again, this is where someone from Texas would be better able to answer your questions. However, if the tax bill you recently received was to pay for the calendar year 2019, then the bill should be prorated with the Seller covering that portion which covered the first 6 months. At closing, title companies usually have both parties sign a statement (at least they do here) acknowledging that they will pay for any adjustments or corrections that need to be covered.