Why would a seller protest an increase in their property taxes when their home is under contract or expected to sell soon? Because it could help them as much as it helps their buyer.
Who Pays Property Tax?
Property taxes are typically prorated at closing between the buyer and seller. The amount is based on figures currently available from the county at the time of closing. While some title companies or escrow officers may handle it differently, most will use the most current tax information they can find.
If closing is in April or earlier in the year, then we only have the previous year’s tax figures to go on. If closing is in November or December, we usually have the actual tax statement to use. Closings that take place any time between April and October will depend on the county appraisal district figures for the current year’s tax amount.
While the actual tax amount isn’t released until autumn, notices of property appraisal values are typically mailed to current homeowners in April or May each year by their county tax appraisal district.
A Rude Surprise
Too often, a seller gets a rude surprise at their summer or fall closing when their share of that year’s property taxes is much higher than expected. The dialog tends to go something like this:
Seller: Wait a minute. My property taxes are $___ a year. So, my share should only be $___.
Escrow officer: We base the estimated property taxes on the amount the county projects them to be. They show your taxes going up $____ this year. You should have gotten a statement in the mail notifying you of that.
Seller: But I didn’t protest my taxes because I’m selling the property. I thought I’d just be paying my share based on the previous year’s taxes.
Escrow officer: You are required to pay your portion of this year’s property taxes for the number of days you have owned the property this year. If the estimated property taxes are higher, then you owe your share of those higher taxes.
Seller: I don’t think I agreed to that.
Escrow officer: You agreed to it when you signed your contract to sell. Let’s look at paragraph 13 of your contract that deals with prorations.
Seller: Ugh.
When homeowners receive notices of property appraisal values in May each year, they are given a few weeks to protest the county’s value. The deadline can vary based on property type and county.
How to Protest
Follow these suggestions from a previous article and protest your taxes — even when you are selling.
If the property taxes go up in the year the property is sold, then the buyer may refigure the prorated taxes between buyer and seller and demand the seller pay their additional share of taxes owed.
Sellers should consider protesting their property taxes and paying it forward. It might pay them back.
