At closing, in addition to general closing costs, there are often adjustments made between buyer and seller. NH property tax adjustments at closing are very common since tax dates do not often match closing dates. The information below might help you better understand how this works.
NH Tax Bill Periods & Dates
Most towns in New Hampshire issue tax bills twice a year, and the tax year does not necessarily match the calendar year. Each bill typically covers a period of time before and after the bill due date. For example, the town of Bedford tax bills are due July 1st and December 1st. The July bill covers April 1st through September 30th. The December bill covers October 1st through March 31st of the next year.
NH Property Tax Adjustments at Closing
Because of the tax bill periods and dates, NH property tax adjustments at closing are very common. Let’s use the Bedford NH tax periods mentioned above to illustrate a few possible scenarios.
If a closing takes place on January 31st, the seller would have already paid the December bill which covers through March 31st. This means the buyer will need to reimburse the seller for taxes covering January 31st to March 31st.
If a closing takes place on April 30th, the tax bill covering that period will not be paid until July 1st. In this case, the seller would have to reimburse the buyer for property taxes covering April 1st thru April 29th, which the buyer will pay when it’s due on July 1st.
Mid-year bills (i.e. July 1st bill) are often estimated bills. Tax rates are usually set later in the year. Therefore, the December bill could be different from the July one. The December bill is often the final one that takes into account amounts already paid mid-year.
Closings for most of the calendar year use estimated tax amounts rather than actual ones since that’s the only information available at the time. At closing, lenders typically have buyers and sellers sign a document indicating that they must handle any additional adjustments directly with one another should the tax amount be incorrect or change after closing.