In the state of Kansas, real estate taxes are paid in arrears. This means that the taxes for 2018 are not payable until the end of 2018. The county issues the tax statements in the beginning of November each year. The 1st half is due on December 20th and the 2nd half the following May.
How does this affect real estate sales?
As soon as the new tax statement is available at the county treasurer’s office in November, we obtain a copy of it. For all closings that happen between early November through the end of May, our closing agents ensure that the taxes are paid in full during closing. The only exception to this rule is when the Lender will pay the taxes directly out of the escrow account. For example, if a closing happens in February, the seller will pay the 2nd half taxes during closing, even though technically they are not due until May.
Why we do it this way:
In most counties, the new owners will not receive a 2nd half tax statement. So, it would be very easy to forget to pay the 2nd half in May. The treasurer’s office would think that the previous owners are responsible and send notices to them. However, the previous owners have already given a credit to the new owners to pay the bill (through the tax proration), so they actually aren’t responsible. As you can see, this can cause a lot of unnecessary stress on all the parties.
Things to tell buyers to reduce the stress:
- If there is an escrow account with the Lender, the taxes usually will be paid from it.
- The tax proration is a credit to the buyer for taxes that will come due in the future.
- We cannot be sure exactly how much the new taxes will be until the county tells us in November. But they usually are close to the amount due last year unless there was a building project.
- Realtors or buyers can always call our closing agents to ask questions. It doesn’t matter how many months ago the closing happened. We are happy to help you find the answers!