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How much are your taxes/yr.?
Have you seen a settlement statement yet?
I think you are getting worked up over nothing. I am sure they are prorated to the date of sale.
No Im not.
I should be getting a little under 12,000
Instead I am getting a little under 10,000
The taxes don't get paid right away. The new buyers get a bill in Sept just like I would if I lived here. That is a $2000+ loan for 8 months or so.
So instead of being able to pay the taxes from last year myself. I have to give the buyers the money 8-9 months in advance so they can pay it in September.
You said the taxes in Illinois are due in two installments, the last being in either Oct or Nov. Did you just make a tax payment in either Oct or Nov, 2007? If so was it the second installment (or full payment) and for what year (or period of time) were those taxes levied?
Look at your copy of the tax bill before answering.
If the tax bill you paid was for year 2006, then you lived in your house for all of 2007 and first half of Jan, 2008, without paying any property taxes for the year 2007 and 15 days of 2008. The tax money you would have had fork over by Oct or Nov, 2008 for your 2007 taxes and the 15 days of Jan, 2008 due later is what you are paying the buyer at closing in order to convey clear title at closing.
Now if any of the tax monies you paid in either Oct or Nov, 2007 were for part of your 2007 property taxes (again, check your bill) you may have a legitimate complaint. It may be that the proration was not done correctly.
The basic premise is: you gotta pay up on the taxes in order to sell the property.
Last edited by therrboomer; 01-10-2008 at 11:29 PM..
Reason: additional thoughts
I understand this as it is what the title company says, but what it all boils down to is I am giving up interest on $2200 for 8 months. While that might not be a whole lot, it ends up being one $2200 loan to the buyer for almost a year.
$2200 for last year plus the first 15 days of this year. I 100% understand the first 15 of this year, but I don't understand why I am being forced to give a $2200 loan to someone for 8-10 months.
No your not, what it boils down to is that you have not paid your property taxes yet this year and the buyer is entitled to make sure that those funds are available to pay them. Its not their fault YOU did not pay your taxes yet.
The fact that they are not due yet, does not minimize the fact that they will be due sometime in the future and that the buyer will be paying for your share of the taxes owed. What makes you think that a buyer isnt entitled to receive the funds for taxes that you owed for?
The taxes don't get paid right away. The new buyers get a bill in Sept just like I would if I lived here. That is a $2000+ loan for 8 months or so.
So instead of being able to pay the taxes from last year myself. I have to give the buyers the money 8-9 months in advance so they can pay it in September.
A suggestion, if you desire to pay the taxes yourself:
Why don't you just pay the taxes then?
The revenue departments will take the money now, I would think. I would confirm that with them.
Your current tax liability will convey with the property. If they are not paid, the county/city/municipality can seize the property. Your Buyer's Lender will not be too impressed with your promise to pay taxes on a property in which you then have no other interest.
Or is it a cash deal? Then your Buyer should require some form of resolution of your tax liability with funds in place or paid at closing, IMO.
How will they, Buyer or Lender, know the taxes will be paid, unless you put the money up now? What other security do you offer? This isn't done on a handshake and a promise when title to a property is in the balance.
This is how it is done all across the country, with minor details changing from one area to another. It is not a "loan" but clearing up an obligation and closing the deal cleanly.
You are right: you ARE losing use of your $2,200 for the remainder of the year.
Is this crummy? Yes. Is it legal? Yes. Does the selling process have any provision for interest compensation? Not in Texas, where I own property, anyway. Why not? Probably because it further complicates an already complicated transaction.
But that doesn't mean that you can't try to change the law if you're a registered voter. Be like our forefathers: an agent of change. Contact your legislators. That's your perogative if you disagree with the law.
You are right: you ARE losing use of your $2,200 for the remainder of the year.
Is this crummy? Yes. Is it legal? Yes. Does the selling process have any provision for interest compensation? Not in Texas, where I own property, anyway. Why not? Probably because it further complicates an already complicated transaction.
But that doesn't mean that you can't try to change the law if you're a registered voter. Be like our forefathers: an agent of change. Contact your legislators. That's your perogative if you disagree with the law.
Thank you for someone finally understanding what is going on.
Now my question is, is this a law (since you are a property owner in texas, I would assume you know), or is it just "how it is done"?
i agree with the last post. if you go pay your taxes now for what you owe you will have a receipt for closing and there will be no further deductions.
1. I can't go pay my taxes now as they vary every year and I have to wait for the tax bill (2006 it came in July, 2007 it came in September, different by about 200 some dollars).
2. If I go pay the taxes for last year now, it defeats the purpose which is interest on the money.
Ok. I am closing on my sold house Tuesday. I pay taxes out of pocket (not with my mortgage). The title company is deducting my $2200 property taxes from the money I am receiving at sale and giving it to the buyers as they are the ones receiving the property tax bill (supposedly linke to address).
This is the biggest bunch of s--t I have ever heard of (I am in Illinois by the way for those that have had experience). Nobody could give me a good answer as to why it had to be like this. Property taxes are dues in August and October or Sept and November. Basically I am giving these new buyers a $2200 loan for 9 months and then they pay the taxes. Is this some sort of law? I would rather keep that $2200 myself and put it in a savings account, so I at least get some interest.
Any thoughts as to why I am having to do this and can I fight it? Responses from someone knowledgeable with Illinois law would be great. Thanks.
This happens everywhere in the USA.
See, the thing is, you have accrued property taxes. To make a very long story short, for 2007 you owe X amount of property taxes. But you only owned the house let's say... 6 months. So you're required, by law, to include in the price of the house the accrued property taxes. Because, get this, the bank is assuming your liability, because liabilities increase your basis in property.
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