Why Am I Paying a Property Tax Certificate?

Houston Real Estate Podcast with Dale Ross

What is a property tax certificate and why do you pay it every time you sell a home? Today we're discussing the finer points of why a title company orders this certificate.

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A customer recently asked me about property tax certificates and why you have to pay them every time you sell a home. It's a great question, as not many people know exactly what a property tax certificate is.

Basically, whenever you sell your home, the title company will prorate taxes from the beginning of the year up through the closing date, and as a seller, you're responsible for those property taxes. The buyer, then, is responsible for taxes moving forward. The title company will actually hire a property taxes certificate company, who will then determine exactly what the property taxes were for the previous year and certify the number. This gives the title company a hard number to use for prorating the taxes.

The certificate ensures you've paid property taxes up to the point of sale.

At the end of the year, the taxes could have increased or decreased. If they increased, the seller may actually owe the buyer a little more money for the time frame in which they owned the home. On the other hand, if the property taxes decreased, then the buyer may owe the seller some money based on the tax amount. The property tax amount for a house is set every year on January 1st.

I hope this clears up any confusion you have about property tax certificates. If you have any more questions about this topic or there's another topic you're interested in learning more about, give me a call or send me an email. I'd love to answer any questions you have!