Do I have to worry about the taxes?

4 Replies

So tomorrow I might go to see a house, I haven't bought a house yet I'm just starting out. It's a 3bed 2bath, 2096 sqft, single family hi ranch for $169,500 on long Island. Anyway my question is, if my goal is to flip this property do I have to worry about the taxes? (The taxes are $11k/yr) are taxes paid at closing or through out the year? Any other advice is welcome (first house I'm going to look at) 

I don't know about NY, but in NC buyers are given a credit from the seller that covers the property taxes from the first of the year through the date of sale.  So, if the property taxes are $12000/yr (to use a number close to your example) that would work out to $1000/month -- if the sale occurred on April 1, the buyer would receive a credit for the first three months of taxes, which would be $3000.  The taxes aren't actually due until the end of the calendar year, but the buyer is given/credited that money at closing.

If you were that buyer, and you owned the house for five more months while you rehabbed it and sold it on September 1, you would then owe the new buyer a credit for $8000, which would cover the first three months of the year in which you did not own the house but were compensated for by the first seller, and the five months that you actually did own the house.  

In NC, that credit is deducted from the sale price during closing so you don't have to come out of your pocket with cash.

I want to stress that I am not a lawyer and I have no idea if NC real estate law approximates NY real estate law in this matter.

If you are purchasing and selling through conventional retail channels, the seller is generally responsible for bringing taxes current prior to or at closing.  Most counties bill taxes twice per year.  The county tax collector site should provide the due dates.  You could conceivably avoid paying taxes if the timing is right and you do the repairs and sell quickly.  Best to plan for paying at least 1/2 year of taxes.

thank you guys for your input, I appreciate it 

Out here taxes are pro rated at the time of closing. Seller pays from jan 1- close. I pay from close - dec 31st. 

http://www.nolo.com/legal-encyclopedia/who-pays-the-real-estate-taxes-the-year-you-buy-your-home.html

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