Don't Forget the Property Tax Credit

Now that we're well into the second half of the year, it's a good time to remember that the property tax credit that the seller gives to the buyer will affect the amount of money the buyer needs for closing costs.

At the closing, the seller will credit the buyer one day of taxes from January 1 until the closing date.  If the taxes on a property are $2,400 a year, the tax credit will be about $1,600 if the closing is at the end of August, and about $200 more every month after that.

If the buyer is asking the seller to pay some of the buyer's closing costs, the tax credit needs to be included in the calculations when deciding how much to ask the seller to pay.  If the buyer doesn't consider the tax credit and asks for more than the buyer will actually have to pay at closing, the seller gets to keep the excess money.  Good for the seller, but bad for the buyer.

If you're going to be asking a seller to pay some of the closing costs for your buyer, make sure you ask your lender if they have considered the tax credit when they tell you the amount to ask for.

  
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