When You Might Pay Property Tax Twice: A Comprehensive Guide

Let’s cut to the chase: you might find yourself paying property tax twice in specific scenarios, primarily related to property sales, refinancing, or errors in payment processing. Understanding these situations is crucial for homeowners to avoid overpayment and navigate the complexities of property tax obligations. Let’s break down the most common culprits and provide clarity on how to handle them.

Navigating the Double Payment Maze

The confusion around potential double property tax payments often stems from overlapping responsibilities and timing conflicts. Here’s a detailed look at when this is likely to happen.

• Property Sales: This is the most frequent scenario. When you sell your home, the closing process involves a division of property tax responsibilities. Usually, the seller is responsible for taxes up to the closing date, and the buyer takes over afterward. The confusion arises because the property tax bill might arrive after the closing, showing the total amount due for the entire period. If the seller hasn’t already paid their portion through escrow at closing, they might be tempted to pay the full bill, unaware that the buyer is now responsible for the remaining portion. Similarly, a buyer might accidentally pay the entire amount if they’re unaware the seller covered part of the bill at closing.
• Refinancing Your Mortgage: Similar to a sale, refinancing can lead to confusion. Your lender might escrow your property taxes as part of your monthly mortgage payment. However, if you’re refinancing, the old lender might have already paid the property taxes for the year. The new lender may also begin collecting escrow funds immediately, potentially resulting in a duplicate payment. This is especially true if the refinancing occurs close to the property tax due date.
• Payment Processing Errors: Mistakes happen. Sometimes, a bank error, online payment glitch, or county assessor’s office snafu can result in your payment being processed twice. This is less common, but it’s important to monitor your bank statements and property tax records to catch these errors quickly.
• Incorrect Escrow Calculations: If your lender’s escrow account is miscalculated, they might over-collect funds, leading to an overpayment of property taxes. This could result in a “double payment” in the sense that more than the required amount was sent to the taxing authority.
• Late Payment Penalties: Though not technically a double payment, a late payment penalty added to an already paid bill can feel like you’re paying twice. Always double-check payment dates and ensure timely submission to avoid these fees.

Proactive Steps to Avoid Double Payments

The best approach is prevention. Here’s how to minimize the risk of paying property taxes twice:

• Meticulous Record Keeping: Keep copies of all property tax bills, payment confirmations, and closing documents related to sales or refinancing.
• Clear Communication: Communicate with your realtor, closing attorney, lender, and county assessor’s office to clarify who is responsible for paying which portion of the property tax bill.
• Review Closing Documents Carefully: The closing statement (HUD-1 or ALTA settlement statement) will detail the division of property tax responsibilities between the buyer and seller. Understand this document thoroughly.
• Monitor Your Escrow Account: Regularly check your mortgage statement and communicate with your lender about your escrow account to ensure proper funding and disbursements.
• Verify Payment History Online: Many counties offer online access to property tax records. Use this resource to confirm payments and identify any discrepancies.
• Set Up Alerts: If possible, set up email or text alerts for property tax bills and due dates.

Correcting a Double Payment: A Recovery Strategy

If you suspect you’ve made a double payment, act swiftly.

• Contact the County Assessor’s Office: This is your first point of contact. Explain the situation and provide supporting documentation (e.g., payment confirmations, closing statements).
• Contact Your Lender (if applicable): If your lender is involved, inform them immediately and provide the same documentation. They can assist in reconciling the escrow account and recovering the overpayment.
• File a Claim for a Refund: The county assessor’s office will likely have a process for claiming a refund. Follow their instructions carefully and provide all required information.
• Document Everything: Keep records of all communication, documents, and actions taken to resolve the issue.

FAQs: Unraveling Property Tax Mysteries

Here are some frequently asked questions to further clarify the nuances of property tax payments.

1. What happens if I accidentally pay my property taxes twice?

The county assessor’s office will typically recognize the overpayment. They will likely issue a refund for the excess amount. However, you need to contact them to initiate the refund process. Don’t assume they will automatically send you a check.

2. I sold my house, and the new owner received a property tax bill that includes the period I owned the property. What should I do?

Refer to your closing statement. It should clearly outline the division of property tax responsibilities. If you paid your portion at closing, forward the bill to the new owner, along with a copy of your closing statement as proof. If you didn’t pay your share at closing, you are responsible for paying the portion of the bill covering the time you owned the property.

3. My lender over-collected for my escrow account, resulting in excess funds for property taxes. What are my options?

Contact your lender to review your escrow account. They should provide a detailed explanation of the escrow calculations. If an overage is confirmed, you can request a refund or have the excess funds applied to future mortgage payments. Lenders are often required to refund overages above a certain threshold.

4. I paid my property taxes online, but I’m not sure if the payment went through. How can I verify it?

Check your bank statement for the transaction. Also, most counties have online portals where you can view your property tax account and payment history. If neither option confirms the payment, contact the county assessor’s office immediately.

5. What is a “supplemental” property tax bill, and why did I receive one after buying a new home?

A supplemental property tax bill is issued when a property is reassessed due to a change in ownership or new construction. It reflects the difference between the previous assessed value and the new assessed value. It’s essentially a one-time adjustment to account for the increased value of your property.

6. Is it possible to prepay my property taxes for the next year?

Some jurisdictions allow prepayment of property taxes, while others do not. Contact your county assessor’s office to inquire about their prepayment policy and any associated requirements.

7. What happens if I don’t pay my property taxes on time?

Late payment penalties will be assessed. The penalty amount varies by jurisdiction. If the taxes remain unpaid for an extended period, the county can place a lien on your property and eventually foreclose to recover the unpaid taxes.

8. Can I appeal my property tax assessment if I believe it is too high?

Yes, you generally have the right to appeal your property tax assessment. The process and deadlines vary by jurisdiction. You will need to provide evidence supporting your claim that the assessed value is inaccurate (e.g., comparable sales data).

9. What is an escrow account, and why do I have one with my mortgage?

An escrow account is held by your lender to pay your property taxes and homeowners insurance premiums. The lender collects a portion of these expenses with your monthly mortgage payment and then pays the bills on your behalf. It ensures these crucial obligations are met on time.

10. How can I change my property tax mailing address?

Contact your county assessor’s office and provide them with your new mailing address. You will likely need to complete a form or submit a written request.

11. I received a property tax bill for a property I no longer own. What should I do?

Contact the county assessor’s office immediately and provide them with documentation proving you no longer own the property (e.g., the deed from the sale). This will prevent you from being held liable for taxes on a property you don’t own.

12. If my mortgage company is responsible for paying my property taxes, do I still need to verify that they are paid on time?

Yes! It is always a good idea to verify that your lender has paid your property taxes on time. You can do this by checking your mortgage statement, contacting your lender directly, or checking the county assessor’s office website. While rare, mistakes can happen, and it’s your responsibility to ensure your property taxes are paid to avoid penalties or foreclosure.

By staying informed, keeping meticulous records, and communicating effectively, you can navigate the complexities of property taxes with confidence and avoid the costly mistake of paying twice.