Home Buying in Phoenix>Question Details

Agnes, Home Buyer in Phoenix, AZ

I heard that when you buy a house you could not pay taxes for two years?

Asked by Agnes, Phoenix, AZ Tue Jan 29, 2008

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I have also heard that the federal income tax is illegal. Certainly, not that case. Taxes and death, as they say. FYI: Law makers are trying again this year to establish a transfer tax on property exchanges and sales. Your local and state Board of REALTORs have continued to fight for personal property rights by opposing such bills.
Web Reference: http://www.joearizona.com
1 vote Thank Flag Link Thu Feb 14, 2008
Yes, It's not uncommon when buying new construction, that in the first year, or two, that they might not have the "updated" taxes, but that does not mean you won't have to pay the new adjusted amount. It just means that suddenly at a year or two, you will receive a HUGE new bill, and will have to pay it in short order.

You're better off, presuming the taxes will increase dramatically, when buying new construction (talk to your Realtor, they'll be able to give you a guesstimate on the taxes) and you should plan on escrowing that amount, just in case.
1 vote Thank Flag Link Wed Jan 30, 2008
Alan May, Real Estate Pro in Evanston, IL
MVP'08
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No taxes? No way. As answered earlier, on new construction it may take the county a while to catch on that this is no longer bare land, but in Coconino County, they have improved their monitoring of Certificates of Occupany and it happens quickly. The builder may give you a credit at closing. You may be paying taxes up front to your mortgage escrow account. In some redevelopment districts, in some states, you may have a reduced rate for several years because the government has tried to encourage the redevelopment. There may be all sorts of scenerios where someone has the impression they are "paying no taxes" but it is an illusion. Especially with the government, there is no such thing as a free lunch.
1 vote Thank Flag Link Wed Jan 30, 2008
I have seen personally that when you buy a new house, first year taxes are very low or next to nothing, and because taxes are paid in arrears (spelling) that your first real tax bill may not be received for close to two years. I think this has to do with the property still being taxed as land during the subdivision construction phase...

Looking forward to hearing better responses...
1 vote Thank Flag Link Tue Jan 29, 2008
If you could be more specific on the taxes you are referring to I could better answer your question and if you have the address of the property in question I would be more than happy to find out the tax rate for you.

Good luck!
Susan Bodnar
Web Reference: http://www.susanbodnar.com
0 votes Thank Flag Link Tue Jan 29, 2008
Since the question wasn't clear on what kind of taxes, 2 intances come to mind.
1st is referring to what Dave said. Property Taxes. On a new build may be very low (A few hundred dollars) your first year because you are probably being taxed on the vacant land. The next year it will assess at the improved value and you probably see an increase.(improved being a home was built.
2nd is referring to Capital Gains Tax. Federal IRS guidelines say that you must live in your home for 2 years in order to not get the capital gains tax imposed. (the capital gains tax is imposed only if you are selling) Please read IRS.Gov web page regarding this, I am not a tax consultant, as there is whole lot more to that law than what I stated.
0 votes Thank Flag Link Tue Jan 29, 2008
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