When buying a home, do you need to prepay some property taxes?

Question

We are buying a condo and are wondering if we need to prepay taxes for that property at closing?

Answer 1

Just as a point of information, if you do not wish to have your mortgage company collect an amount of prepaid taxes (escrow reserves) you may ask if you have the ability to waive the escrow of these items. Generally you are able to waive the escrow on most conventional mortgage if the Loan to Value is less than 80%. Be aware that there may be a small fee for this waiver as the loan becomes riskier if you are paying your own taxes instead of having them escrowed with your mortgage payment. Some loans will allow for waiver of the escrow account even if you exceed the 80% Loan to Value threshold. Ask your lender for specific details.

Answer 2

Although I'm not 100% about the differences in a condo and a house, i do know that if you intend to have your property taxes paid as part of your house payment, your lender will require that you pay 2-5 months ahead at time of escrow-- that way if you ever get a little behind, they still have more than enough to cover the taxes.


If the seller already paid taxes for past the time the property transfers, they receive a credit back-- paid by you. I bought a house in Mid-december which had been paid through the end of the year, and owed teh seller $50 for the last 2 weeks of the year.

Answer 3

Three separate items to factor in:

1. Your lender will require you to set up a tax escrow account for your real estate taxes (county, school, city). Depending on the time of year, this could be anywhere from 2 months to 12 months.

2. If the seller has already paid his taxes in full for the current year, you will reimburse him at closing for the amount he's owed back. For example, if closing is on December 1st, you will reimburse him for 1 month (assuming taxes are due at year end).
Consult your agent for the specifics.

3. Some states have a transfer tax to convey property from one person to another. Here in PA, the tax is 2% of the sales price and is typically split 50/50 by buyer and seller and is paid at closing.

Answer 4

In Illinois, taxes are paid March a million and back later interior the three hundred and sixty 5 days. The March a million price is an estimate (a million/2 of the faster 3 hundred and sixty 5 days's price), the later price is sufficient to repay the total quantity due. the money paid in 2007 is really the 2006 tax. California might want to have a more effective sensible gadget. once you've an escrow account, you'd be pay into the account beforehand of time, although the taxes are not easily paid till the money leaves the account.

Answer 5

That really depends on the state and country. Our state required us to pay half the stamp duty up front - and for a first home buyer the rest was waved. Other states might require all of it up front and some might not. Also the rates and types of taxes might differ. Best to ask a vendor/realtor or homeloan providor for more details on yoru particular case I'd say.

Answer 6

Taxes are prorated at the time of sale. Depending on when you buy you may have to pay a portion of the taxes.