Question

Current ad valorem property taxes owed by the seller that have NOT yet been billed at the time of closing are an example of A) nonrecoverable items. B) prepaid items. C) exempt items. D) accrued items.

Answer 1

Current ad valorem property taxes owed by the seller that have NOT yet been billed at the time of closing are an example of (D) accrued items.

• The portion of the budgeted expenses of a taxing body that must be funded by real property taxes.
• Taxing entities occasionally use an equalization technique as part of the assessment process to reduce significant differences in assessed values within a district.
• The taxation authorities in Texas will only accept payment from one entity when it comes time to pay the property taxes at the end of the fiscal year.
• The property taxes will therefore be prorated at closing when you sell or buy a home so that each party pays their fair share of the year's taxes.

How does property tax work in Texas?

• Texas levies property taxes as a percentage of each home's appraised value.
• So, for example, if your total tax rate is 1.5%, and your home value is $100,000, you will owe $1,500 in annual property taxes.

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