As a real estate expert with extensive knowledge in property transactions, I can provide you with a comprehensive understanding of who pays property taxes when you buy a house and how the process typically works.
When you purchase a property, you are essentially taking over the financial obligations associated with that property from the seller. This includes property taxes, which are an ongoing expense that property owners are required to pay to the local government. The responsibility for paying property taxes shifts from the seller to the buyer at the time of the property's transfer of ownership, which is usually at the closing of the sale.
Here's a detailed breakdown of how property taxes are handled during the home buying process:

### Pre-Closing Period
Before the closing date, the seller is responsible for paying property taxes. Property taxes are typically calculated on an annual basis but are often paid in installments, such as semi-annually or quarterly. The seller has paid these taxes up to the point of sale, covering the period for which they have owned the property.

### At Closing
Reimbursing the Taxes at Closing is a critical step in the transfer of property tax responsibility. At the closing, the buyer reimburses the seller for the property taxes that have already been paid for the period starting from the date of sale to the end of the tax period. This ensures that the seller is not left out of pocket for taxes that cover the time when they are no longer the owner of the property.

For example, if the property taxes are paid annually and the seller has paid the tax for the year in advance, but the sale closes in June, the seller has effectively paid taxes for the period until the end of the year. The buyer, therefore, must reimburse the seller for the portion of the annual tax that applies to the period from the closing date (June) to the end of the year (December).

In the example provided, if the annual property tax is $1,000 and the closing takes place on June 30, 2017, the seller has paid for the entire year. The buyer would need to reimburse the seller for the taxes paid from June 30 to December 31, which is half of the annual tax. If we calculate this as $1,000 divided by 2, the buyer would pay the seller $500 as part of the settlement. However, the example you provided states $746.68, which suggests there might be additional factors or a different tax period calculation in play.

### Post-Closing Period
After the closing, the buyer becomes responsible for paying property taxes moving forward. This typically means that the buyer will start paying property taxes for the new tax period, which may begin immediately after the closing or at the start of the next tax period, depending on the local tax schedule.

### Proration
The process of prorating property taxes is essential to ensure that both parties are treated fairly. Proration involves calculating the exact amount of taxes that the seller has paid for the time they owned the property and the amount that the buyer should pay for the time they will own the property from the closing date.

### Escrow Account
In some cases, an escrow account may be used to manage property taxes. When you make your monthly mortgage payments, a portion of the payment goes into the escrow account. The lender then uses the funds in the escrow account to pay your property taxes and, in some cases, homeowner's insurance premiums on your behalf.

### Conclusion
In summary, the responsibility for paying property taxes when you buy a house shifts from the seller to the buyer at the closing. The buyer reimburses the seller for any prepaid taxes for the period after the closing date but before the end of the tax period. It's crucial to understand the local property tax laws and the specific terms of your real estate contract to ensure a smooth and fair transaction.

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Reimbursing the Taxes at Closing. At closing, the buyer reimburses the seller for the property taxes that have already been paid for the period starting from the date of sale to the end of the tax period. The buyer in the example above would thus have to pay the seller $746.68 as part of the settlement.Jun 30, 2017read more >>