People often don’t understand real estate interim tax bills…causing issues when the sizable bill arrives. In this blog post, we discuss interim tax bills…Have questions or need professional real estate guidance from a seasoned real estate professional? Call Jennifer King @ 717-723-9080!
What Is An Interim Tax Bill?
New Construction Interim Tax Bills:
An interim tax bill is a bill that is issued when there are additional taxes owed for taxes which were not yet calculated at the time of settlement.
In new construction, the property has typically already been assessed for the land value only.
Once the structure is completed, the county tax assessment office sends someone to the property to determine the new value. The county then contacts the taxing authority, who then issues the interim tax bill based on the new assessment amount.
It’s important to remember interim taxes as you discuss with your lender how this relates to your financing and payments. The lender estimates what your tax bill is going to be on the (unknown) new assessment – and how much money you’ll need at settlement. Keep in mind that with new construction it’s not possible to know exactly what that tax bill amount is going to be. The lender typically calculates an estimate within your closing costs, but that money is not collected at settlement. You’ll want to make sure that you’re setting the estimated taxes aside so that when the interim tax bill arrives, you’ll have the money needed to pay your interim tax bill.
In southcentral and southeastern Pennsylvania, our taxes are generally calculated for the school tax period running July 1 through June 30 – and for the county and municipal tax period running on the calendar year January 1 – December 31.
Remodeling / Upgrading Interim Tax Bills:
The second instance where you may encounter an interim tax bill is in the event that you’ve done some major repairs or upgrades or additions to your property. When building permits were issued, that generally causes a reassessment to occur based on the updated property value. Again, you’re going to have an updated (interim tax) bill that you’re once the updates/upgrades have been completed.