topic Re: New Construction Property Taxes in Mortgage Loans

New Construction Property Taxes

Anonymous — Thu, 19 Oct 2017 00:18:42 GMT

I’m buying a new construction home in Chicago. Does anyone know when taxes are reassessed to go from vacant land to improved property for tax purposes?

Is it when the build is complete or when someone buys it?

Re: New Construction Property Taxes

kc0039 — Thu, 19 Oct 2017 10:55:16 GMT

Build is complete and the county assessor assesses the property. Which county? If you're in Kendall county AND in Yorkville, anticipate 4% of sale price for taxes the year after the build is done. If you're in cook county, anticipate 2.5% - 3% for taxes.

Re: New Construction Property Taxes

Anonymous — Thu, 19 Oct 2017 11:06:44 GMT

It’s in Cook county in the city of Chicago. I’ve anticipated taxes should be about 2% (I own a older
Home a mile down the street) but the builder won’t re-prorate the taxes when they come in. It’s been complete since July, trying to figure out if I have to pay a higher tax rate from July until I take occupancy in December.

Re: New Construction Property Taxes

kc0039 — Thu, 19 Oct 2017 14:45:20 GMT

Older doesn't really have anything to do with it. Anticipate 2.5% to 3% and get a refund in escrow rather than paying more money into it once taxes adjust. Lenders will do the bare minimum and will only charge 1.5%. Builders won't reprorate taxes. That's just generally how they are. Since it's complete this year, the taxes will adjust next year since we pay taxes in arrears.

Re: New Construction Property Taxes

Anonymous — Thu, 19 Oct 2017 14:49:01 GMT

Oh, I"m not worried about escrow. I don't want to get stuck with the sellers portion since the home has been built since July sitting empty. I am wonering since they won't re-prorate the taxes, are we on the hook for the improved taxes from July-December of this year even though we don't move in until end of November.

Re: New Construction Property Taxes

kc0039 — Thu, 19 Oct 2017 15:44:34 GMT

Yes you are

Re: New Construction Property Taxes

Anonymous — Thu, 19 Oct 2017 16:06:55 GMT

@Anonymous wrote:
Oh, I"m not worried about escrow. I don't want to get stuck with the sellers portion since the home has been built since July sitting empty. I am wonering since they won't re-prorate the taxes, are we on the hook for the improved taxes from July-December of this year even though we don't move in until end of November.

Do you own the home now? and just not moving in until November? Or are you closing in November? You are only responsible for the time in 2017 that you are the owner of record.

Re: New Construction Property Taxes

Anonymous — Thu, 19 Oct 2017 16:07:53 GMT

We will be moving in during November. But the seller wont re-protate the taxes that they are from today.

Re: New Construction Property Taxes

Anonymous — Thu, 19 Oct 2017 19:07:56 GMT

@Anonymous wrote:
We will be moving in during November. But the seller wont re-protate the taxes that they are from today.

I understand that from your prev comment. You didnt answer my question: Do you OWN the home already? Or does the seller still OWN it? Like right now, today...If you own the home when did title transfer from the seller to you?

Re: New Construction Property Taxes

Anonymous — Thu, 19 Oct 2017 19:09:12 GMT

oh! No we do not own it, going through the process now. We will close next month.

Re: New Construction Property Taxes

StartingOver10 — Thu, 19 Oct 2017 20:48:26 GMT

Builder contracts are entirely different than most normal Purchase & Sale contracts.

IME builders will give you a flat amoumt of $$$ toward closing costs and all of the normal seller closing costs are pushed over to the buyer side. Typically the amount provided toward closing costs by the builder covers the amount a seller normally pays with a small amount left over to cover your closing costs. Sometimes the contribution doesn't even come close to cover the what would be the builders (normal) expense if they were a typical seller. It is also typical that builders do not change there pro-rations after closing - for any reason. Read your contract. What does it say about the builder contribution and the items to be taken out of the builder contribution first? It is usually very specific and they very specifically schedule the charges in a particular order with all of their costs coming first and your costs coming thereafter.

As to your property taxes, how they are handled at closing is detailed in your builders contract. The time to negotiate these items is upfront before you sign the contract. I know it's too late for you now, but future buyers should take note.

Re: New Construction Property Taxes

Anonymous — Thu, 19 Oct 2017 20:48:52 GMT

Thanks, but I realized all of that. I did speak to my attorney finally so I got my answer. Which is...The county charges improved taxes once we close, until then the property is taxed at unimproved property.

Re: New Construction Property Taxes

Anonymous — Fri, 20 Oct 2017 12:58:20 GMT

@Anonymous wrote:
oh! No we do not own it, going through the process now. We will close next month.

You are responsible for the taxes from the day you close/own the house/fund; whichever is pertinent in your area. How you would be responsible for taxes on something you dont own is crazy. I bought new construction, closed in May. 17th. Taxes were prorated that builder was jan 1 - may 17. Me, may 17 - dec 31. Thats just the way it goes.