Property tax protection is the equitable distribution of property taxes between the buyer and the seller. Sellers assume responsibility for property taxes until the day the property is officially sold. The buyer pays property taxes from the date the purchase is final. A buyer buys the finished house on May 15, 2005. Since the 2005 tax bill is not available at the time of closing, the standard language of the offer requires that tax production be based on the 2004 invoice, which amounted to $500. As a result, the seller`s property tax credit amounts to approximately $US 200. However, at the end of the year, the buyer will receive the 2005 tax bill for $US 4,000. The net result is that the buyer pays 3800 $US and the seller only 200 $US. If the buyer has not been properly informed of this possible outcome, the real estate agent has the unenviable task of explaining that the taxes have been correctly proportional according to the offer. Unfortunately, the fair distribution of new construction operations is sometimes not as fair.
Local appraisers are legally required to value real estate from 1 January of each year. Before construction, the previous year`s tax bill represents only the value of the vacant land. The tax bill for the closing year is based on the value of the property as of January 1, if the property may still have been empty or included the new building or partially completed structure. The seller`s credit is usually based on the previous year`s tax bill, with the exception of closures in December when the tax bill is available, and in most cases it is a fair distribution of the current year`s tax bill between the buyer and seller. . . .