A Word About Tax Impounds in California
November 4, 2010
Property taxes in the state of California are governed by Proposition 13 which was an initiative passed by the voters in 1978. It sets the property tax rate at 1% of the purchase price plus the bonded indebtedness of the municipality in which the property is located. Thereafter, the county assessor can raise to property valuation by up to 2% of the assessed value. When a property is purchased, the taxes are changed from the sellers tax valuation to a new valuation based on the purchase price. Lenders use this new valuation to determine the amount of tax impound they will require if the buyer's loan requires an impound account or if the buyer chooses to set up an impound account. Usually the impounds are collected with the monthly payment and include property taxes and insurance payments. This money is then used by the lender to pay the tax and insurance bills when they come due.
Depending on the time of the year, the amount collected for the taxes changes. For example:
If your closing month is November and your first payment is not made until January, the lender will collect through escrow 4 months payments of taxes. Here is the chart for the amount collected.
January closing/March loan payment = 6 months of taxes
February closing/April loan payment = 1 month (This is because the second half year of taxes will be paid through escrow at the time of closing.)
March closing/May loan payment = 2 months
April closing/June loan payment = 3 months
May closing/July loan payment = 4 months
June closing/August loan payment = 5 months
July closing/September loan payment = 6 months
August closing/October loan payment =7 months
September closing/November loan payment = 8 months
October closing/December loan payment = 9 months
November closing/January loan payment = 4 months
December closing/February loan payment = 5 months
Property taxes in the state of California are governed by Proposition 13 which was an initiative passed by the voters in 1978. It sets the property tax rate at 1% of the purchase price plus the bonded indebtedness of the municipality in which the property is located. Thereafter, the county assessor can raise to property valuation by up to 2% of the assessed value. When a property is purchased, the taxes are changed from the sellers tax valuation to a new valuation based on the purchase price. Lenders use this new valuation to determine the amount of tax impound they will require if the buyer's loan requires an impound account or if the buyer chooses to set up an impound account. Usually the impounds are collected with the monthly payment and include property taxes and insurance payments. This money is then used by the lender to pay the tax and insurance bills when they come due.
Depending on the time of the year, the amount collected for the taxes changes. For example:
If your closing month is November and your first payment is not made until January, the lender will collect through escrow 4 months payments of taxes. Here is the chart for the amount collected.
January closing/March loan payment = 6 months of taxes
February closing/April loan payment = 1 month (This is because the second half year of taxes will be paid through escrow at the time of closing.)
March closing/May loan payment = 2 months
April closing/June loan payment = 3 months
May closing/July loan payment = 4 months
June closing/August loan payment = 5 months
July closing/September loan payment = 6 months
August closing/October loan payment =7 months
September closing/November loan payment = 8 months
October closing/December loan payment = 9 months
November closing/January loan payment = 4 months
December closing/February loan payment = 5 months
posted by shirley harry at 8:27 AM
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