Unpaid property taxes in the housing market is not an uncommon occurrence. This situation often occurs when the home has sat empty, or the previous owners missed payments.
Either Buyer Or Seller Can Prorate Unpaid Property Taxes
Buyers should carefully review their real estate contract and closing disclosure to determine who will be paying that year’s property taxes.
The seller may agree to pay the unpaid taxes for the amount of time they have owned the property up to the sale point for that year. That is, prorated. This means that if a buyer closes on the property in October, the seller will have to pay all taxes up to that point.
However, suppose the seller has already paid that year’s property taxes. In that case, the buyer must reimburse the seller for their prorated share.
Buyers Are Responsible For All Property Taxes After Closing
After the home is closed on, all responsibility for property taxes falls on the new homeowner. Before purchasing, all prospective buyers must save up and budget accordingly, finding a loan that will work for their needs.
Always look at property taxes before purchase, so there will be no surprises come tax time.
Beware Of Properties With Tax Liens
If the property a buyer is looking at has a tax lien, the government has a right to that property until the debt is paid. A buyer can purchase the home in cash via a tax deed sale, but the tax lien becomes their responsibility. The unpaid tax is generally taken out of the sales proceeds at closing if there is equity in the property.
This purchase decision should be made with an experienced agent such as those at Merchant of Homes. Our team of experts stands ready to help you find the property of your dreams, be it a home or recreational property in Missouri.