If you’re buying a property in South Bend before the end of the year (or anytime), it’s well worth paying attention to the property taxes. One house listed for sale today had a property tax bill of $25,364. Another is listed for $17,500 and had a recent property tax bill of $2,067 – an effective rate of 11%.
In Indiana, property taxes are billed in arrears, so each year’s bill is paying for the previous year’s services. The 2008 bills, for example, will pay for the services from 2007. For clarity, many people use both years when naming taxes – like “2007 pay 2008 taxes.”
The 2007 pay 2008 property taxes have not yet been billed by St. Joseph County as of 11-6-08. A phone call and quick question to the county treasurer’s office got me the response that they expected the 2007 pay 2008 tax bills to be sent late November or early December.
This means when you buy property in South Bend before the end of the year, you’ll want to make sure that 2006 pay 2007 taxes have been paid and that you collect enough money from the seller to cover the as of yet unbilled 2007 pay 2008 taxes. If you work with a Realtor, the title company they use to process your sale should take care of this – to the specification written in the contract you signed (your offer). But you should still ask your agent to explain it fully and be sure you understand how the tax liabilities are being sorted. If you are buying property without representation, or at an auction, do your homework because the tax liabilities can be considerable.
There are further tax considerations when buying new construction or foreclosed / bank-owned homes that involve the assessments and exemptions. If you find yourself considering the purchase of either new or foreclosed homes, double check how the taxes will be addressed at closing. The difference to your pocket can be severe.
If you want more detailed info on South Bend’s property taxes, the State of Indiana has a useful property tax web-site where you can read a “Citizen’s Guide to Property Taxes,” look up assessed values and recent property tax bills.
If you’re considering a purchase and need more specific advice, e-mail nick@realst8.com.