Hello, Sara-
If you purchase your home before the next tax billing cycle (Summer July taxes), the title company pro-rates the taxes based on last year's tax amounts because that is what the taxing authority will use for the figures supplied to the title company. This is in your favor, as you will be credited (at closing) at the non-homestead amount for the period of time in 2009 that the seller still owns the home.

Where it can get complicated is in the type of tax pro-ration you choose in your offer. If you choose "calendar year" pro-ration, all taxes billed in the year you close will be estimated by the title company based on last year's taxes.

If you choose 'fiscal year' pro-ration, especially if the property is a foreclosure being handled by detroit attorneys, you could be paying a much higher share of the taxes at close (depending on whose fiscal year they decide to use - whatever is in the seller's favor).

This is especially important if your lender is using these figures to escrow your future taxes. Even if you are paying nothing down, these amounts are added into your mortgage, amounts that you may be paying interest on for 30 years.

1) Choose calendar year pro-ration when you write your offer,
2) Make sure you are closing before the end of April so you can claim the Principal Residence Exemption (Homestead) for 2009, and
3) Make sure your lender contacts the taxing authority (village, city or township) to find out the homesteaded amount (what it would have been for 2008) to base your escrowed taxes and your set tax amount in your monthly payments for 2009.

Lenders do not automatically do this -especially if they are located outside of Michigan, and it can be a substantial difference in your payments for this year.

If you are not already working with a Realtor, email me for additional information. I was on the property tax board of review for our township for 4 years.

-Lynn lafton@greenridge.com

Hi Sara,
When you close on the home, the closing agency will help guide you. You have to file
a homestead exemption before May 1st at the township hall where the property is located.
You will assume the non-homesteaded tax until then. Ask your agent to help you, your
offer may be based upon the taxes you will be assuming.
Good Luck! Feel free to email me if you have more questions about this.
Sincerely,
Marcia

Hello, Sara.

If a property is your primary residence, you can claim the home with a homestead exemption prior to May 1st, as long as you own it. If this is not claimed by May 1st, a property owner must wait until the following year, as that is the law.

Best of luck, and great decision to take advantage of the buying opportunities that exist!

Derek