Why did I get a property tax bill if I have escrow?
Glad that you asked!
When you have an escrow account, it might be perplexing to receive a property tax bill. You may be wondering why this happens since your mortgage lender is in charge of your property taxes. With the help of our Dallas tax services, you can find the causes of this prevalent yet complex scenario.
Overview of Escrow Accounts
The reason behind your quest for, ‘Why did I get a property tax bill if I have escrow?’ is that mortgage lenders set up escrow accounts to make paying property-related expenditures easier. They act as a holding account for your property taxes, homeowners’ insurance, and, occasionally, homeowner association payments. This account receives a portion of your monthly mortgage payment, accumulating cash to meet these expenditures when they become due.
Timing and Evaluation Periods
Local governments levy property taxes to pay for services like schools, roads, and public amenities. Your county or municipal tax assessor will typically assess these taxes yearly or semi-annually. However, the invoicing and assessment schedules may not precisely correspond with your escrow account.
Inconsistencies in Timing
Issuing property tax invoices and releasing payments from your escrow account may need to be in sync. Tax invoices frequently come before your lender receives compensation. Due to the scheduling difference, you may get a bill despite having cash in your escrow account.
Changes in Tax Rates
Property taxes are not set; they might change due to reassessment of property values or changes in municipal tax rates. A rise in your property’s assessed value or a difference in the tax rate may result in a more significant tax bill. Your escrow account may need more money to pay the higher amount, resulting in a charge for the difference.
Shortages in Escrow Accounts
Your escrow account may occasionally need more funds. This occurs when the lender understates the amount required to cover taxes or insurance, resulting in inadequate cash in the report. As a result, you may get a property tax bill to make up for the shortfall.
The Bottom Line
Summarizing the discussion on ‘Why did I get a property tax bill if I have escrow?’, it is essential to recognize that property taxes and escrow accounts can often collide, resulting in the seemingly paradoxical circumstance of getting a tax bill despite having an escrow account in place. Maintaining open lines of contact, our CPA The Woodlands TX services will assist in clarifying any doubts and ensuring that your property taxes are managed efficiently through your escrow account.
