How much can you expect the real estate tax payment to be when you close on your home in Iowa City? This is one of the top questions I get asked by sellers listing their homes in Iowa City, Coralville and North Liberty IA. The other Closing Costs For Sellers are pretty straightforward. Real estate taxes are not.
This post is a little complicated and if you want to “ball park” it, a year’s taxes is typically a good number to go with. This example ends up with a real estate tax payment for 13 1/2 months, a September closing would be less, but figuring on a year’s real estate taxes is a pretty solid place to start.
It’s this time of the year we get our tax statements and the first half is due on September 1, 2012, and the second half on March 1, 2013. Since we’re paying a year in arrears, that covers real estate tax payments from July 1, 2011 to June 30, 2012. (That’s the first confusing part, the tax year is not the same as a calendar year).
If you think about that for a second you’ll realize that a house closing in August, the seller would need to pay a full year’s taxes to the buyers to cover up to June 30, 2012. And that would only cover the amount the Johnson County Treasurer has sent out tax statements for. It wouldn’t cover the time since June 30, 2012 and the seller would still need to add another month and a half real estate taxes for that. (Those would need to be estimated based on a formula provided by the Johnson County Assessor). In this example, for an August 15 closing the real estate tax payment to the buyers would be 13 1/2 months worth of taxes.
A closing in September would look different, since your lender is likely to have paid the July portion of the real estate taxes from the escrow account, (due on September 1), that would translate into you paying less to the buyers for a September closing.
Now that I’ve brought up the escrow account, I should explain that any funds in an escrow account remain yours. It’s not that the lender gets to keep them when you sell your house, they’re just not available and can’t be calculated into any payments prior to closing. They will be refunded to you when the lender receives the pay off for the home loan.
Are you getting ready to sell your home the Iowa City area? Cardinal Realty is based in Coralville Iowa and our primary area of expertise is helping clients buy and sell homes in Iowa City, Coralville and North Liberty IA. When you’re ready to get your home sold, give me a call at 319-400-0268 or drop me an email. I promise you it will be worth your while!
Disclaimer: This post is a bit on the technical side and I feel the need to point out that you shouldn’t make any financial decisions based on the information provided. Trust and Verify as the saying goes. It’s safer!