It’s Tax Season

What to know about Tax Payments and Real Property Tax Increases

Tax season for real property can be a bit tricky for many homeowners.  It is important to know certain information regarding the payment of the tax bill for your new property.  Most real estate Purchase and Sale Agreements have a clause providing for the proration of the tax bill (s) for the property between the buyer(s) and seller(s) as of the date of closing.  If you closed on your property prior to the tax bill posting, the seller gives a credit to the buyer for the prorated share of the tax bill from the beginning of the year to the date of closing and the buyer will pay the entire tax bill when it comes due and payable.  If you closed on your property after the tax bill posting, the buyer will then give the seller a credit from the date of closing until the end of the year.  Most counties in Georgia post tax bills in third and forth quarter of each year.  There are a few exceptions so make sure to check with your closing attorney or your county tax commissioner. 

Counties have multiple exemptions that may be applied for through the county Tax Commissioner’s office.  A few are detailed herein. 

  1. Homestead exemption:  Homestead exemption is a property tax deduction for homeowners who own, occupy and declare the property as their legal place of residence as of January 1 of the tax year.  If the previous owner filed for homestead exemption, then the property taxes would have been assessed at a lower value than an owner who does not apply for homestead exemption.  However, the new owner will have to file for their own exemption for the following tax year.
  • School Tax Exemption:  This is a reduction is property tax payments for homestead property for persons over a certain age as of January 1 of the current tax year.  The age requirement varies by county.  Most counties in Georgia allow qualifying individuals to apply for discounts to their property taxes for school tax exemption.  This will result in the current tax amount being substantially less than the tax amount for an individual who does not qualify for these specific deductions.  The new owner will have to file for their own exemption for the following tax year. 
  • New Construction:  Taxation for land is substantially less than taxation for a property which has a building or dwelling located thereon.  If you purchased new construction this year, be advised that your escrow account with your lender for the tax escrows may be substantially less than what will be the assessed value of your property for the next tax year depending on how the lender set up the escrow account, you will need to prepare for an increase in your Tax escrows for the following tax year.  You will need to place an additional per month into your escrow account to adjust for any shortages caused by an increase in your property tax bill. 

It is extremely important to understand that your tax bill will change based on the reassessed value by the county, the filing or withdrawal of exemptions available in your county and the change in the land assessment based on the construction of a new home.  By filing the correct and available exemptions with your real property tax authority, you can see a great reduction in your real property tax bill. 

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