It’s true. One of the most contentious things I’ve seen happen in a closing is when the seller (typically an engineer) reads that North Carolina Property taxes are assessed by the fiscal year (July 1 to June 30) but collects the bills on a calendar year (January 1 to December 31).

(For the most recent tax rates go to https://www.ncacc.org/research-and-publications/research/property-tax/)

No, the tax offices are not out to fool anyone or take advantage of those of us who could care less what a fiscal year even means. The tax bills come out in July but you don’t have to pay them until December. This gives the lender plenty of time to make sure they have enough money in your escrow account to pay the taxes. (If they don’t, you can be sure they will let you know there is a shortage). The taxes for the next year aren’t assessed until July, so you aren’t really ever paying more or less due to this system. Although Engineer Ted has certainly had much to say about it.

Because of the confusion, the Real Estate Lawyer Association of North Carolina, in collaboration with the Real Property Section of the North Carolina Bar Association, the North Carolina Land Title Association, the North Carolina Association of Assessing Officers and the North Carolina Tax Collectors’ Association (phew that’s a lot of associations!) put out a brochure explaining how real property is taxed, how to prorate the taxes and why. We have the brochure in our resource section, it’s a thing of beauty.

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