Q: My house is for sale and my tax bill is due next month. I am being told that an offer is possibly on the horizon.
If I sell the house after I have paid the taxes, am I entitled to a partial refund depending on when the house sells? Thanks!
A: Even if you get an offer tomorrow, you likely won’t close until after your taxes are due. That means it’s incumbent upon you to pay your tax bill on time.
When it comes time to close on the sale of your house, you and the future buyer will negotiate a “proration” of taxes. You will pay for the percentage of the year you lived in your house. The buyer will pay for the percentage of the year he will have lived in the house.
For example, if your tax bill is $3,650 per year, and you sell your house on January 10, 2007, you will have lived in the house for 10 days of the year. Your tax bill would be $10 for each day you live there in 2007, or about $100 for the 10 days.
If you pay half of your tax bill, or $1,825 on the first of January, then close on January 10th, the seller would owe you approximately $1,725. That amount would change hands at the closing.
Your real estate attorney, if you’re using one, can fill you in more. Otherwise, talk to your agent or escrow company about what is commonly done about taxes in your neck of the woods.
Published: Dec 9, 2006