Seller financing and who pays RE taxes

Real Estate Agent · Bloomington, IN · Member since 2016 · 62 posts · 19 votes

When seller financing a deal, and you register with the clerk that some amount of ownership has traded, are RE taxes on the property going up?

In my state, property taxes are adjusted at sale to effectively be the price that someone has paid for the property.

Does a seller finance deal trigger this change in tax?

I'm looking at a deal that's been owned long term and the taxes are low. A sale at their price would double the taxes.

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Nathan ZiererPro Member
Architect · St. Louis, MO · Member since 2020 · 50 posts · 40 votes
4y
The buyer will pay the RE taxes on the property typically. I guess you could get a concessions for them in the first year or worked out with the buyer in the price or cash back at closing; though because its seller financed I doubt they would do that. Because you will want it recorded that the transaction has occurred there really isn't any way around this. I guess you could get something like a quit claim deed, but that would be bad on the sellers part because he won't have much for insurance that payment would actually happen - and I don't think you could do that at a title company because they have ethics regulations about that (everyone would just quit claim deed their house over for $10, and you would by a paper clip for $200,000 and then there would be no basis for taxation)
Besides the money won't really be made in the 6 months to a year by; the time you recoup your buying expenses, any repairs or upgrades you need to do the property or just rebuilding reserves. But more over, if the property taxes are going up are going to kill your deal, how are you going to deal with inflation of services such as water, sewer, trash or general handyman/materials for the project? Our water/sewer bills are all expected to rise about 8%-11% this year.
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Quote from @Sam Epperson:

When seller financing a deal, and you register with the clerk that some amount of ownership has traded, are RE taxes on the property going up?
In my state, property taxes are adjusted at sale to effectively be the price that someone has paid for the property.
Does a seller finance deal trigger this change in tax?
I'm looking at a deal that's been owned long term and the taxes are low. A sale at their price would double the taxes.
Yes, it will likely trigger a tax adjustment.
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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 4k+ votes
4y
Seller financing is just a form of financing.

Title will transfer to the new owner.
Property taxes may go up.
Property taxes are the responsibility of the new owner.
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Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
4y
Buyer pays the taxes
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