FAQ About Taxes

Who can tell me what my property taxes will be?

The seller and/or your realtor should be able to provide you with the current property taxes for the property. Property taxes are reassessed from time to time so this amount may change.

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My HUD1 Settlement Statement reflects moneys collected for a tax service. What is a tax service and how does it work?

All pertinent information about your property is submitted to the taxing authority. The taxing authority responds with the tax due amounts. These amounts are then forwarded to the lender and the tax payments are processed when due.

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When are taxes paid?

Taxes are paid the month they are due based on the due date established by your local taxing authority.

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How are my property tax bills paid?

Depending on your loan program and state restrictions, your monthly mortgage payment may or may not include funds to pay your property taxes. If your payment includes money for property taxes these funds are held in escrow by the lender and the lender pays your property taxes as they are due. If your payment does not include property taxes, you are responsible for paying them by the due date.

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How do you know what amount to pay for my taxes?

The taxing authority provides the amount of the taxes.

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Do you pay taxes at the discount amount?

Typically, yes for those states that offer a discount amount. For all other states, the lender will pay upon the due date provided to us by your taxing authority.

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Why would I receive a tax bill if I was escrowed for taxes?

If the loan closed within 30 days of the tax due date, it is likely the taxing authority will send the bill directly to you. That bill should be forwarded to the lender to be processed promptly.

Some states are called a "homeowner area." The taxing authority will not give the bill or any tax information to anyone except the homeowner. In this case, the homeowner must forward the bill to the lender immediately as taxes cannot be paid without the bill.

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Do I receive a paid receipt for taxes paid from an escrow account?

Check with your lender and/or tax authority.

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What is a supplemental tax bill?

Your taxing authority sends supplemental bills to you due to a change in tax amounts from a recent assessment on the property. This may happen, for example, if an addition or improvement is made. In Calif., when you buy a home, you are issued a supplemental bill. The assessment has then changed. In N.J., when an improvement has been made or new construction has occurred, you are issued an added assessment bill.

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How often is this supplemental tax assessed?

It varies by state and county.

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What states have these types of supplemental taxes?

The following states have these types of supplemental taxes: Calif., Ohio, Va., Idaho, Nev., Conn. (called C/O or certificate of occupancy bills), N.J. (added assessments) and Pa. (interim bills).

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Why is it my responsibility to pay a supplemental bill? Why is it not paid out of escrow?

Tax offices will only send the supplemental bills to you. If you desire to have it paid from escrow you must forward this bill to the lender. The lender will then pay the annual installment amount from this assessment, even if there is not enough accumulated in your escrow account. The lender needs to receive this bill from you prior to the delinquency date or you will be charged the penalty. If there is a penalty, it will be removed from the escrow account with the supplemental payment.

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