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I think there is a mis-understanding of when taxes are due vs. the time period of the tax. Most property taxes are due & paid in arrears not in advance. Here's an example:
I sold my home on July 10, 2009. My property taxes were paid as required, I was current = in good standing.
* The taxes that have accrued from January 1, 2009 - the date of the sale, July 10, 2009 have not been paid because they were not yet due.
* The country will not send out statements for 2009 taxes until early in 2010.
At closing the title company calculated the estimated amount of tax for the period I owned the home in 2009 (Jan. 1 - July 10). I was charged this amount and the buyer was credited the same amount.
Next year, in early 2010, taxes for the year of 2009 will be due and the new buyer will be responsible for paying the entire amount.
Hope this makes it more clear.
I'm trying to figure out how that works. Who exactly did you pay for taxes if they arent due yet? I'm doing an owner carry so there is only the title company involved and buyer and seller. No banks involved.
I'm trying to figure out how that works. Who exactly did you pay for taxes if they arent due yet? I'm doing an owner carry so there is only the title company involved and buyer and seller. No banks involved.
What does your contract say? Who will be responsible for paying 2009 taxes?
Whether taxes are paid in advance or in arrears depends on where you live.
If they are paid in advance, the buyer will owe you the prorated portion back that you have already paid.
If they are paid in arrears, you will owe the buyer the prorated portion back that has not been paid yet. It will go into their escrow account if they have a loan, and (I think) be paid direct to the buyer if they have no loan.
I'm not sure on an owner carry, how it would work though. I think that would need to be addressed in contract.
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