The Money Mustache Community
Learning, Sharing, and Teaching => Taxes => Topic started by: Farmer123 on December 25, 2016, 09:28:51 AM
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We will be building a house soon and I am looking at how our monthly expenses will change once we take on the mortgage, property taxes, insurance, etc.
One thing I have heard is that property taxes may not begin until the following year..
If we build in 2018, say from May to September, when would we have to begin paying property taxes?
We are in Wisconsin, guessing it could vary by state.
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Will depend on your state or county and when the reassessment is done I think.
As an example, my home was built new. I bought in March 2012. First 6 months of 2012 property taxes were based on the land value only. June thru December taxes were based on value of land + building. Gulp, increase of $5k per year.
As for the part about not paying property taxes for first year, I doubt that. But it could mean that you prepay prop taxes at closing or it could mean the reassessment MAY take some time to catch up, as mine did. But why would any county decide to give any homeowner a free ride for one year? Housewarming gift? Not likely.
Anyway, congratulations on your new home. :).
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Thanks Bluehouse. Your explanation makes perfect sense. I am guessing the reassessment/paying for the land value only for part of the year is correct, rather than getting a "free" year.
It would be a pleasant surprise if they did anything better. I researched some websites and cannot find anything. I can give the county a call also.
And thank you :) we are very excited.
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We got a "free" year. Probably depends on both the county and the state.
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As for the part about not paying property taxes for first year, I doubt that. But it could mean that you prepay prop taxes at closing or it could mean the reassessment MAY take some time to catch up, as mine did. But why would any county decide to give any homeowner a free ride for one year? Housewarming gift? Not likely.
That's exactly how it works around these parts. Property taxes are paid in advance. For example, I pay mine in December for 2017. If I sell in April, the closing usually "refunds" May-Dec to me in my net payout and "bills" the buyer for it.
Building is different... as it relies on the appraisal district to notice your house and reassess the value. In my case, I've been here 5 years and they county still hasn't noticed I have a house. ;) I'm being taxed for my land and an outbuilding that was there before the house was built.
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Some property taxes are paid in arrears. We pay property taxes a full year delayed. This also means when we sell the house, we will be responsible for paying the percentage of "unpaid" property taxes (up to a year worth) as part of closing.
Some locations will give tax breaks for a period of time to incentivize development.