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Do you prorate taxes and HOA fees?2018-07-31T08:26:05+00:00

LandInvestors.com Forums **Ask A Question** Do you prorate taxes and HOA fees?

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  • Neil H
    Participant
    Post count: 67

    Hello,

    I have a Colorado property I’m closing in-house and the 2018 property taxes and HOA assessment have not been paid yet since they’re not due until later this year (about $300 total between the two). Should I tell the seller I need to prorate those? This should save me about $190. Or do I suck it up and pay them myself?

    What do you normally do?

    Thanks,

    Neil

    Kevin Farrell
    Moderator
    Post count: 690

    Neil – I try to find out these costs up front as you have done. Then I absorb them up to a point. I make a big deal out of telling the seller that I am paying him $1000 for the property AND I am paying the HOA fees and taxes. It makes the seller feel better about dealing with me. Just a little icing on the cake.

    When I list the property, I adjust the list price slightly to cover the fees and taxes. Then I always make it clear that the property has no taxes or fees owed when selling it. I try to differentiate my properties from distress properties. In summary, I pay the taxes and fees but then get it back on the sales price.

    I almost never charge the seller or the buyer for taxes and fees unless the taxes are excessive.

    Chuck Lidtka
    Participant
    Post count: 108

    Simply tell the buyer they will be responsible for the upcoming HOA dues and tax bill, even if some is owed and that information will be coming to them when the property transfers. Be fully transparent on what they are. Let them know they are getting a really sweet deal which far more than covers such fees vs. if they were to pay retail for your property.

    Chuck Lidtka
    Participant
    Post count: 108

    A couple ways to do it (above) depending on the property value. And if you close with a title company I let them prorate it unless I’ve told the buyer otherwise.

    Neil H
    Participant
    Post count: 67

    Thank you, Kevin and Chuck.

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