A property’s taxes may not be paid when the home is empty before selling or the previous owners missed payments. Unpaid taxes on a property aren’t unusual in the housing market.

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If there are unpaid property taxes on the home, make it clear who pays what when.

Unpaid Property Taxes Are Often Prorated

unpaid property taxesUnpaid property taxes can be prorated where the seller pays the appropriate amount of taxes for the amount of time they have owned the property. For example, if you close on the home in September the seller will be responsible for the property taxes up until that point. Then, taxes become your responsibility after that.

If the seller has already paid the property taxes for the year, the buyer will have to reimburse them for their prorated share. Be sure that any prorated taxes are clearly stated on the real estate contract and the closing disclosure.

The Buyer Is Responsible For Property Taxes After Closing

When a buyer purchases a home, they are responsible for all taxes after closing since they now own the home. If property taxes are not paid, it could have a tax lien put on it and could potentially be foreclosed on.

What If The Home Has A Tax Lien On It?

A tax lien means that the previous owner of the home didn’t pay a tax on it so the government has a right to the property until the debt is paid. While you can purchase a home with a tax lien on it, you will have to pay for the home in cash. Then, the unpaid taxes become your responsibility to pay off.

If you need a loan, you will not be able to purchase a home with a tax lien.

When it comes to unpaid property taxes on a home, work closely with your realtor to determine who pays them and when. Have the home sale contract clearly state these requirements that each party pay their share of the tax.

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The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.