Here's a quick overview of how buyers and sellers know who pay taxes at closing.

Paying property taxes can get tricky when you're buying or selling a home—especially in Illinois, where taxes are paid a year behind. 
Here’s a quick overview of what buyers and sellers need to know:  

Tax bills are paid In arrears, meaning that taxes for this year are paid next year.

So what do we do when taxes are due but cannot be paid until a bill is issued until well after a closing?

A tax credit is what we do.

This way a seller credits a buyer at closing for the estimated amount of seller’s tax liability for a particular period of time. Then a buyer will be in control to pay that bill when issued after the closing.

But how to we know how much to credit? This is the tricky part and if you get it wrong, there is an under or over credit that will cost you real money down the road.

Depending on the closing date, the tax assessment cycle, changes in property values, and exemptions, tax rates and other underlying factors, calculating a tax credit can be a difficult exercise.  

A basic rule of thumb in the Chicagoland area, is to credit taxes based on a 5% to 10% increase in taxes over the prior known year. This will work much of the time but quite often this rule of thumb needs a closer examination. Especially in a reassessment cycle.

We know what to look for to protect your interest. Reach out to me with questions or for more details on what to anticipate for tax credits whether buying or selling. Our firm specializes in navigating details like this.