8 Things Houston First Time Home Buyers Should Know About Homeowners Tax Proration
Image: Texas Comptroller of Public Accounts
Hello and welcome to Houston First Time Home Buyers Edition, formally First Home Houston (FHH), where we provide useful information to help Houston first time home buyers make the most informed decision when it comes to buying, decorating, and maintaining their first home.
Tax proration is when the buyer and seller divide the responsibility of paying the tax bill on a property for the year that the home is sold.
The sellers is responsible for the taxes for the time they owned the property up until the day before closing.
The buyer will be responsible for the remaining taxes for that year.
To figure out the tax proration amount, you will need to know the property taxes for the year, using the current tax rate and the closing date.
Property taxes are determined in October.
For the sellers - to calculate the tax rate, January until October. Take the current tax amount and divide it by 365 to get the daily rate. You will then take the daily rate and multiply it by the number of days the property was owned during the year. This will result in the seller giving the buyer credit at closing.
For the buyer - you will calculate from October to the end of the year. Take the current tax amount and divide it by 365 to get the daily rate. You will then take the daily rate and multiply it by the number of days the property was owned by you, until the end of the year. This will result with the buyer giving the seller credit at closing.
Keep in mind, if the property was sold between January and October, the result will be a credit to the buyer. However, if the property was sold after October, and the taxes were paid by the seller, the result will be a credit to the seller.
While we know that you would not be figuring out these numbers yourself, that is a part of the escrow agent’s responsibility, we just want to make sure you fully understand how they arrive at the figures, should you need to know.
As always, thank you so much for stopping by. Remember, if you are thinking of purchasing your first home, please contact us. We are here to help. We have been helping Houston first time home buyers since 2011 and we can help you. I hope you have an amazing day. Until next time...Diana
