How Austin Property Taxes are Handled at Closing in November and December
If you are selling your home or purchasing a home and close in November or December, then this post is for you. The 2011 Travis County property taxes are now due and payable so they are handled differently at closing than earlier in the year. What does this mean for you?
The actual tax bills come out in October. That means when homes are closing January through mid-October, everyone is using an estimated property tax amount with an agreement to work out the difference if there is one. The estimated amount tends to be accurate but you never know the actual final amount until the bill shows up in October.
So if you are closing in November or December, here is how your property taxes will be handled at closing: sellers will be charged for the entire tax bill at close (or provide a paid receipt). If the seller has an escrow account with their current mortgage, the amounts will be refunded after closing from the prior lender. It’s not a bad idea to check with your mortgage company to find out exactly what date they plan to pay your taxes … your title company will help with this coordination.
Your HUD-1 Settlement Statement will have a credit to the seller from the day of closing until 12-31-2011 from the buyer.
Buyers will have a new escrow account set up for 2012 (if you have a mortgage; we are currently seeing mortgage escrows set up with 2-3 month reserve). The HUD-1 Settlement Statement will have a debit from the buyers and a credit to the sellers for the remainder of the year.
So the seller pays the full bill at closing with the buyers crediting them for their portion of the year and the buyers set up their new tax escrow with their new mortgage company … all done at closing. If the sellers had / have an escrow account with their mortgage company (the one they are about to pay off at closing), then that mortgage company will mail the sellers the balance of their escrow account back to the sellers usually within 3-4 weeks; so yes, there is an overlap for the seller.
After December 31, tax prorations return to estimated amounts.
Questions? Happy to help or call your friendly Austin Realtor, lender or title company.