When you close in February, you will receive a tax credit from the seller for 1 year and 1.5 months of taxes at the higher rate, if your purchase agreement was written as such. Since we pay taxes in arrears, the seller will actually be paying for taxes due last year, payable this year. Assuming you are an owner/occupant with homestead exemptions filed, you will pay approximately 1% or half the current amount beginning in May 2014.
For the next year, you will pay the higher taxes through your mortgage payment. In May and November 2013, your lender will pay the higher amount for which you have already been reimbursed by the seller. In May 2014, when your bank pays the "now lower amount" you will have approximately twice as much in your escrow account than you will need. When your bank does their yearly audit, you will be reimbursed any excess amount.
You will need to file your homestead exemption by 12/31/2013 to be eligible for the lower amount in May 2014. The tax bill due in May 2014 is payment for the 1st half of 2013. You really do not inherit a higher tax, you will be subject to a delayed reimbursement of an overpayment.
The title company will generally file the homestead exemption for you, but it is ultimately your responsibility to make sure it is recorded.
Congratulations on your new home!
Depending on how your purchase contract was written, it may be that the Seller will be giving you a pro-rated amount for property taxes due for the period during which they owned the house.
Like a lot of things in Indiana, we do things backwards. Our property taxes are paid in arrears. We live in a house in one year, and we pay the taxes for that year in the following year, and in two installments.
So...and again depending on your situation...you'll be getting a tax bill this year that's due in May. That bill is actually for the first half of last year. Typically the seller will have given you a credit for that amount. You'll still be responsible to pay the bill.
The same goes for a bill that you'll receive that'll be payable in November. That bill is for the last half of last year. Again, you'll need to pay the bill, but hopefully you negotiated an agreement which had the Seller giving you a credit for that time period.
Then, in 2014, you'll receive a bill that's payable in May. That bill will be for the fist half of this year. For the first month and a half of this year, the Seller was still the owner. Again, it may be that the Seller has given you a credit for those 6 weeks or so of taxes.
With respect to your homestead exemption, it's likely it won't take effect until 2014. However, as I hope I've explained above, the fact that the exemption hasn't taken effect is being accounted for in the tax credit that the Seller is (I hope) providing you.
Principal Broker, REALTORÂ®
MacDuff Realty Group, LLC