As soon as they get their first taste of homeownership, a lot of homebuyers start to think about expanding their real estate portfolio by purchasing an investment property. Owning investment real estate, whether a small apartment building, retail center, or single-tenant property, is an excellent way to diversify your income and build wealth. However, for first-time investors, the process can be a little daunting. But with the right resources and guidance, the transition from homeowner to landlord is very achievable.
Taxes may be the last thing on your mind as you advance through the homebuying process. Yet, there are important tax considerations that need to be worked out before you get to the closing table. One of those considerations is property tax proration.
Property tax proration is a way to split property taxes fairly to ensure that each side is paying for the specific time that they were owners of the property. Since Illinois property taxes are paid in arrears, tax proration ensures that the buyer is fairly compensated for the tax bills they will receive after the closing, for the period in time in which the seller still owned the property.
Your real estate broker can help you better understand what tax proration is, how it works, and how it is calculated. Once you have a home under contract, your real estate attorney will work with the seller’s attorney to determine the exact amount due to you during the attorney review process.
There are few things in life more exciting and terrifying in equal measure than buying your first home (although I have friends who would argue that marriage and having children would top the list).
When you’re considering buying your first home, there are so many things you need to consider: mortgage rates, property taxes, hidden assessment fees and that’s before you even do a home inspection or deal with the hassle of moving. Continue reading