Did you know that the simple act of buying a home can increase its property taxes? Even if you paid a portion of these taxes at closing, you might owe more for the same tax period. That bill for a higher-than-expected valuation weeks or months after taking possession.
The issue occurs due to property tax proration. Proration means both buyer and seller pay the property taxes for the period when they owned the home. Sounds fair, right? Except…
Whenever a home is sold, it automatically triggers a re-evaluation of the property. If the value goes up, the increased value will be charged to the buyer, and calculated from the closing date. So if you purchase a home and pay property taxes, and the valuation goes up 10 percent, your tax obligation will reflect the increased valuation from the day you closed until property taxes are due in your community.
You specify no proration in the sales contract, which means the seller would be liable for some or all of the increase. Most sellers will resist this suggestion, however, and without such a clause, responsibility for the increased taxes rests with the buyer.
Brighton Escrow, in Hermosa Beach, California, can answer your questions about the complicated world of escrow and home closing. To learn more, contact us.