Time for Taxes

The most difficult time to complete closings is in the month of October, simply because the property tax bill has not yet been sent out.  The 2013 tax bills will officially be out the first of November, 2013, but not payable until March of 2014.  This is a difficult concept for most buyers and sellers to understand.

So what is the best way to handle October closings?  For me, I find the best way to handle the taxes is to estimate the 2013 taxes and collect from the buyers on the closing statement.  I make it a point to explain to the buyers that taxes associated with closings that take place this time of year can easily fall through the cracks.  That the buyers may never receive the tax bill because it may still be sent to the seller.  I also explain that I don’t want them to call me in six months and ask why I did not pay the taxes when they purchased the property.

As if the taxes issue is not difficutl enough to expalin (they are paid in arrears and are only accurate on the November and December closings), it is even more difficult to explain how the solid waste is charged.  Solide waste, when appropriate, is included on the tax bill, but paid in advance.  So, on a correct settlment statement, you will see two prorations – one for the taxes (paid in arrears) and one for solid waste (paid in advacned).

 

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