With the large inventory of foreclosed properties, many people are purchasing these homes at discounted prices. Keep in mind it is important to watch the tax prorations when buying foreclosed properities. Below are some tips and guidelines you should follow if you are considering making such a purchase.

1. Look at the 2007 tax info on county web site – was there homestead exemption? Any other exemptions?

2. When was the property foreclosed? If in 2007, there will be no homestead exemption discount for 2008, because the lender owned the property on January 1st.

3. Can you find out the 2008 assessment? Check with the county to determine if there is a new assessment for 2008 and if it is higher than last year.

4. If the 2008 tax bill is not out yet, the closing attorney will prorate the 2008 taxes on an estimate. If there is a new assessment or if the homestead discount has dropped off for 2008, the prorations should reflect this.

5. The seller will pay the prorated share of the ESTIMATE for the 2008 taxes. Make sure that the best estimate is used.

It is important to know if the 2008 bill comes out much highter, there is unfortunately no recourse to the REO seller for the difference. It is always a good idea to check with a real estate attorney for more information and advice.

This entry was posted on Tuesday, June 3rd, 2008 at 6:21 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed.