Buying a home for the first time can be a very overwhelming process. You finally close escrow and you think, wow we are finally done. There are no more papers to sign, no more document requests from your loan officer, and no more open houses – but now what?
You move in, start hanging up some family photos, then you realize it’s a full month after the last day of the month that you closed escrow. It’s now official, your first mortgage payment is due. You review your mortgage statement – there is principal, interest, insurance, and real estate tax line items. Although it’s a lot of money you knew how much the payment amount would be so you reluctantly make your first payment and go back to life as a new home owner.
A few months go by and then you receive a supplemental property tax bill in the mail. Are you responsible for this payment? You thought your mortgage payment covered your property taxes. Are the property taxes paid with your mortgage payment the same as supplemental property taxes? Unfortunately not, as a supplemental property tax is calculated after the assessor’s office re-evaluates the property value after the purchase of a home. In some cases a supplemental bill can be a few hundred dollars but in other cases it can be a few thousand dollars.
So now you have a mortgage payment and a supplemental property tax bill for a few thousand dollars due within the same month? Luckily, the homeowner is not always directly responsible for making the payment but this is something that needs to be confirmed with the escrow company. The first thing you should do when you receive your supplemental property tax bill is contact your escrow company. If there is a reserve of funds these bills will be paid from your escrow account. Unfortunately, if there is not a reserve of funds the homeowner will be directly responsible for the supplemental property taxes. Buying a home may not be easy but when tax season comes around you may be eligible for some significant deductions, which is always nice!
Make sure to contact your LSL Advisor today for more information.
Written by: Lindsey Bocksberger, Senior Tax Associate