It's a question every house-hunter asks when it looks as if the property being inspected just might be The Right One.

And the answer isn't as simple as it may seem.

The matter can be particularly confusing to the buyer of a brand-new house. Often the present property tax is based on an assessment figure set while the building lot was still vacant land. Assessment rolls are closed months in advance of the next tax year.

In a state where taxes are paid in arrears (the opposite of in advance) it could be a couple of years before the new house is assessed at its real value and then billed for its fair share of property taxes. This can come as a real shock to the homeowner, especially if a mortgage company writes to say there's nowhere near enough money in the escrow account to pay the next tax bill.

In an area where assessments are automatically re-set at sale prices, the prudent buyer will calculate how much the tax bill will eventually ask for. Elsewhere, it's worth stopping in at the assessor's office and asking for a rough estimate of what the tax is likely to come to, when all the dust has cleared.

The buyer of an older home also needs to investigate the tax figure that's quoted in the listing information. It's worth checking whether the present owner has some exemption that makes the tax figure lower than it would be to the next owner. State laws vary, but in some areas senior citizens, or seniors on low incomes may have favorable tax treatment. Some states offer veterans partial tax exemption. Tax incentives may be offered to encourage certain agricultural purposes, historic preservation, industry, or other uses.

It's even possible to find the present owner being taxed for more than the real tax figure. In some areas, unpaid water bills, for example, might be added to the property tax bill. Again, the matter should be investigated beforehand.

What the prudent buyer is seeking is known as the "true tax" figure, not the amount the nearby church pays while the minister lives in the property. Yes, a diligent real estate agent should check with the taxing authorities when the property goes on the market.

Double-checking, though, could avoid some unpleasant surprises down the line.

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Published: June 7, 1999

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