This Tax Season: A Property Tax Guide for Georgia Homebuyers

What to Know About Tax Payments and Real Property Tax Increases

Tax season for real property can be confusing for many homeowners. Understanding how property tax bills are handled at closing and what exemptions may be available can help you avoid surprises and potentially reduce your tax burden.

How Property Taxes Are Prorated at Closing

Most real estate Purchase and Sale Agreements include a clause providing for the proration of property taxes between buyer and seller as of the closing date.

If you closed before the tax bill posted: The seller gives you a credit for their prorated share of the tax bill from the beginning of the year through the closing date. You will then pay the entire tax bill when it becomes due.

If you closed after the tax bill posted: You give the seller a credit for the prorated share from the closing date through the end of the year.

Most Georgia counties post tax bills in the third and fourth quarters of each year, though there are exceptions. Check with your closing attorney or county tax commissioner to confirm timing in your county.

Property Tax Exemptions in Georgia

Georgia counties offer multiple exemptions that can significantly reduce your property tax bill. These exemptions must be applied for through your county Tax Commissioner’s office. A few common exemptions are detailed below.

Homestead Exemption

Homestead exemption is a property tax deduction for homeowners who own, occupy, and declare the property as their legal residence as of January 1 of the tax year. If the previous owner filed for homestead exemption, the property taxes were assessed at a lower value than they would be without the exemption. New owners must file for their own homestead exemption for the following tax year.

School Tax Exemption

This exemption provides a reduction in property tax payments for homestead property owned by persons over a certain age as of January 1 of the tax year. The age requirement varies by county. Most Georgia counties allow qualifying individuals to apply for this exemption, which can result in substantially lower property taxes. New owners must file for their own exemption for the following tax year if they qualify.

New Construction Tax Increases

Taxation for vacant land is substantially less than taxation for property with a building or dwelling. If you purchased new construction this year, your escrow account may have been calculated based on the land-only tax assessment. Once the home is completed and assessed, your property tax bill will increase significantly.

Depending on how your lender set up your escrow account, you may need to prepare for an increase in your tax escrow payments for the following year. You may need to contribute additional funds to your escrow account to cover any shortages caused by the increased property tax assessment.

Understanding Your Property Tax Bill

Your property tax bill will change based on several factors: the county’s reassessed value of your property, the filing or withdrawal of available exemptions, and changes in land assessment when a new home is constructed.

By filing the correct exemptions available in your county, you can see a significant reduction in your property tax bill. Contact your county Tax Commissioner’s office to learn which exemptions you may qualify for and how to apply.