- All taxes are based on a fiscal year. The bill covers January 1 through December 31.
- Once the tax bill is posted by the municipality it is a lien against the property and must be paid at or before closing.
- The taxes are prorated on the closing statement. The closing statement is proof for IRS purposes of the amount paid by each party.
- When a lender sends a 1099 at the end of the year showing taxes paid, this amount usually does not include amounts paid at closing but only amounts paid out of the escrow account to the tax commissioner. Buyers and sellers need to consider how taxes were handled at closing when filing taxes.
- If the taxes are under appeal at the time of closing a “lesser” tax bill is issued. another bill may be mailed much later when the appeal is settled; it must be paid or it will be a lien on the property. New owners should pay and then contact the Sellers for their share.
- The GAR Purchase & Sale Agreement contractually binds the parties to assist in re prorating taxes after closing.
If you have any further questions about this, please don't hesitate to contact me!
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