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deciding on should i close my house this year or next year

T

toant103

Lifer
Let's say i want to close my house on Dec 23, 2005, do i pay the full amount on my taxes in 2006 or just for the last week of the year?
 
Originally posted by: toant103
Let's say i want to close my house on Dec 23, 2005, do i pay the full amount on my taxes in 2006 or just for the last week of the year?
Click to expand...

We need more info toant103 🙂
 
let's say i close on my house on dec 23 of 2005. My question is do i have to pay taxes for living in that new house till the end of the year, eventhough i'm only in the new house for like a week. If that's they case, i would rather wait until i close in 2006 and pay for my 2006 taxes in 2007.
 
Taxes are usually prorated on a month to month basis. They might (depending on the rules or contract) due on a dayby day.
Either way, the seller has usually paid them already; you will have to pay for amount of time that you control the residence; by re-embursing the seller for proper proportion of the tax bill for 2005 if you close in Dec.
 
Usually if your taxes are escrowed they are prorated.
Ask your LO or bank who holds the escrow account.
 
Originally posted by: SampSon
Usually if your taxes are escrowed they are prorated.
Ask your LO or bank who holds the escrow account.
Click to expand...


i'm not payingany taxes and insurance in my mortgage. I don't think the seller is paying any taxes now but i'm not sure. My house is a new construction. By the way, i'm in Richmond, VA.

 
I'm not a pro, but I do own several houses.

I don't know how it is in VA, but you pay 2005 taxes in 2005 everywhere I ever heard of. In some localities it's as early as Feb., such as in Pittsburgh, PA. The exact date varies from place to place, but I'm reasonably sure your taxes for 2006 will be due sometime in 2006.

If I'm correct, a 2005 closing will require that 2005 taxes are paid in full and your payment would be for the remainder ( 1 week) of 2005. Up until you close, the new structure is not yet a residence and is taxed lower. The breakdown of who paid what will be on the HUD form, but the local and county governments will have all thier money for the year the closing takes place. A 2006 closing would generally require the full years payment at closing before they will process the deed even if it is before the normal due date. This is often included in the mortgage if necessary and shown on the HUD form.

I bought a house the last week of Dec a few years ago and had a terrible time getting the tax bill for the next year from the city in time to pay it without penalty. They sent it to the old owner who had died.

I would say close in 2006 so the taxing (city, school, county, state) agencies have time (2006 will be paid so 2007 will be next due date) for thier records to settle in. Good luck in your new home!


Jim


 
Originally posted by: xgsound
I'm not a pro, but I do own several houses.

I don't know how it is in VA, but you pay 2005 taxes in 2005 everywhere I ever heard of. In some localities it's as early as Feb., such as in Pittsburgh, PA. The exact date varies from place to place, but I'm reasonably sure your taxes for 2006 will be due sometime in 2006.

If I'm correct, a 2005 closing will require that 2005 taxes are paid in full and your payment would be for the remainder ( 1 week) of 2005. Up until you close, the new structure is not yet a residence and is taxed lower. The breakdown of who paid what will be on the HUD form, but the local and county governments will have all thier money for the year the closing takes place. A 2006 closing would generally require the full years payment at closing before they will process the deed even if it is before the normal due date. This is often included in the mortgage if necessary and shown on the HUD form.

I bought a house the last week of Dec a few years ago and had a terrible time getting the tax bill for the next year from the city in time to pay it without penalty. They sent it to the old owner who had died.

I would say close in 2006 so the taxing (city, school, county, state) agencies have time (2006 will be paid so 2007 will be next due date) for thier records to settle in. Good luck in your new home!


Jim
Click to expand...

Thanks for the info. So the taxes for the reamainder of the year will be pro-rated for the last week. What a relief.



 
If it is new construction then the improvements on the lot may not even be added to the tax roll yet.

"Assessments are determined by the Department of Real Estate Assessments each year based upon the fair market value as of January 1 of that year. The tax rate is set at the end of April. Payment is made to the Treasurer's Office in two installments due June 15 and October 5."

So you may only have to pay on the bare land if noting was built as of January 1, 2005.

When You Purchase or Sell Real Property Under Virginia law, real property is assessed for the entire year in the name of the owner as of January 1st of the year. The purchaser at a sale is required to see that the proceeds from the sale are applied at settlement to any taxes and levies assessed on the real estate. The liability is prorated between the buyer and the seller, but the lien which arises from a delinquency attaches to the land.

If you buy property, your settlement attorney must determine all taxes are due and prorate them for payment out of settlement. If you have sold the property referred to on the tax bill and another person has assumed responsibility for payment, please forward the bill promptly to that person or return it to the Treasurer's Office with information as to the new owner. A delay on your part in this regard may require the new owner to pay a penalty and interest on a late payment.

Now you have some info to decide with.
 
Originally posted by: xgsound
I'm not a pro, but I do own several houses.

I don't know how it is in VA, but you pay 2005 taxes in 2005 everywhere I ever heard of. In some localities it's as early as Feb., such as in Pittsburgh, PA. The exact date varies from place to place, but I'm reasonably sure your taxes for 2006 will be due sometime in 2006.

If I'm correct, a 2005 closing will require that 2005 taxes are paid in full and your payment would be for the remainder ( 1 week) of 2005. Up until you close, the new structure is not yet a residence and is taxed lower. The breakdown of who paid what will be on the HUD form, but the local and county governments will have all thier money for the year the closing takes place. A 2006 closing would generally require the full years payment at closing before they will process the deed even if it is before the normal due date. This is often included in the mortgage if necessary and shown on the HUD form.

I bought a house the last week of Dec a few years ago and had a terrible time getting the tax bill for the next year from the city in time to pay it without penalty. They sent it to the old owner who had died.

I would say close in 2006 so the taxing (city, school, county, state) agencies have time (2006 will be paid so 2007 will be next due date) for thier records to settle in. Good luck in your new home!


Jim
Click to expand...

In the county I live in southern Indiana, you pay property taxes of one year in the next year. Thus, the 2005 taxes are payable in 2006.

 
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