Why do I have to pay the whole property tax bill when the seller owned the property for part of this year?

Thursday, February 16, 2012

This is a very popular question at closing during part of the year because the attorney may say “You will be paying the tax bill for the entire year”.  This is true that the entire tax bill for tax year of the sale will be paid by the buyer if the tax bills are not out yet.  If this is true, the buyer receives a credit on lines 210 & 211 from the seller for the portion of the year that the seller owned the property.  So rather than having to track down the seller to pay their share of the tax bill, the buyer gets a credit to lower the amount needed for closing.  So when the buyer pays the full tax bill later in the year, keep in mind that the credit was given at closing for the seller’s portion.  If the tax bill for the current tax year is available but not paid yet, then the buyer will pay the prorated taxes from the closing date through the end of the tax period and the seller will pay their share from the beginning of the tax period until closing.  For more questions on the mortgage closing process, please contact me.