Q: How are taxes paid in Oregon?
Let's take the 89 - 90 tax year for example.
A: The Oregon Property tax year, in this example, runs from
July 1, 1989 to June 30, 1990. Taxes were a lien but not payable
as of 7/l/89, however, until 11/15/89 taxes could be paid
in 3 installments on 11/15, 2/15, & 5/15 or in full by
11/15 (which enjoys a 3% discount). Taxes not paid on time
are now charged interest at an annual rate of 16%.
Q: How does an escrow company prorate taxes
at any given time?
A: Take the total taxes for the year &
divide by 365:
1,572-00 divided by 365 = $4.3068/day
Remember taxes are a lien as of 7/1, but
you don't have an actual tax amount until October. In most
cases the escrow company will take the prior year's taxes
and add a % for an estimated tax amount. Let's say we are
prorating as of, August 15; from 7/1 to 8/15 would be the
responsibility of the seller. Using the estimated amount,
we would credit the buyer (buyer receives) and debit the seller
(seller owes) Remember: count 7/1 (but not 8/15) when counting
days:
$4.3068/per day multiplied by 45 days = $193.81
The key is to count 7/1 and every day up
to (but not counting) the day you're using for prorating.
Because taxes are not payable until tax billing comes out
(usually October 15th), taxes would be a credit to buyer and
debit to the seller.
After the tax billing comes out an escrow
company will pay taxes in full (if not already paid)
and credit the seller and debit the buyer from date of proration
to 7/l/90.
An example date of proration Jan. 15 (seller
has already paid or will be charged in escrow for taxes thru
June 30) but buyer now needs to "pay back" seller for taxes
from 1/15 to 7/l/90.
$4.3068/per day multiplied by 167 days =
$719.24
In other words the buyer has to "pay back"
$719.24 to the seller because the seller had paid taxes to
7/l/ but closed escrow on 1/15.
