How to Prepay Property Taxes
It can be a nasty surprise when you open the statement showing the amount due for property taxes. If you want to be really organized and ahead of the game, consider paying your property taxes before they are due. Use the following suggestions if you are interested in prepaying your property taxes.
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Instructions
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Contact your county tax assessor's office and any other taxing authorities that you pay property taxes to. Many of these offices have websites that have information about prepaying your taxes. Determine the amount that the taxes are expected to be. If the county tax office cannot give you the new amount, then take the previous year's amount and add ten per cent. Be sure to put your account number, property description, address or legal description on your payment. Check the websites for prepayment coupons for just this purpose.
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Consider having an escrow account when you close on your home or property. Your lender will collect several months of the prorated property taxes anticipated. You are also given a credit at closing from the seller for the property taxes due from them for the portion of the year they owned the property. Most of the time, the seller's credit for property taxes to the buyer is included in the closing costs. You can actually take that money and apply it as a prepayment on the taxes, as you are responsible for all the taxes when they come due.
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Check with your mortgage company if you have an escrow account. A portion of your mortgage payment each month is collected to go into an escrow account to pay the taxes owed on the mortgaged property when the taxes become due. If you anticipate that your taxes will be higher than what is being collected via your escrow account, then you can add extra monies to your mortgage payment. Be sure to designate the additional money as going to your escrow account for taxes.
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Tips & Warnings
Keep all your paid receipts for all property taxes paid. You may need these for your federal income tax records.
The prepayments you are making are based on amounts that are estimations. It is still your responsibility, as a property owner, to verify that the amounts you have been paying will have covered the taxes owed when they actually become due and payable.
