Calculating Annual Taxes
The budgets for the school, county and municipality are not finalized until the middle of the second quarter, any tax increase for the year is reflected in the final 2 quarters. A hypothetical example may help. In 2012, Bob’s House had a property tax bill of $8,000 for the year. Because the budgets were not yet finalized, Bob’s first 2 payments in 2013 were $2,000 a quarter, which is based on his 2012 taxes.
Because of the revaluation and the increases in school, county and local taxes, Bob’s 2013 property taxes increased by $500 to $8,500 a year (or $2,125 per quarter). Bob previously paid $2,000 per quarter for the first and second quarter, therefore the entire $500 increase for 2013 is reflected in the 3rd and 4th quarter. As such, the Borough mailed a 3rd quarter estimated bill to Bob of $2,250. So, it is not appropriate to multiple the $2,250 number by 4, as that would equal $9,000 and as mentioned earlier Bob’s estimated tax is $8,500 for the year. In summary:
If your mortgage company pays your property tax for you, make sure that they are calculating your escrow based on your actual taxes and not just your 3rd and 4th quarter payments.
Because of the revaluation and the increases in school, county and local taxes, Bob’s 2013 property taxes increased by $500 to $8,500 a year (or $2,125 per quarter). Bob previously paid $2,000 per quarter for the first and second quarter, therefore the entire $500 increase for 2013 is reflected in the 3rd and 4th quarter. As such, the Borough mailed a 3rd quarter estimated bill to Bob of $2,250. So, it is not appropriate to multiple the $2,250 number by 4, as that would equal $9,000 and as mentioned earlier Bob’s estimated tax is $8,500 for the year. In summary:
- 2012 taxes, $8,000 for year, or $2,000 per quarter
- 2013 taxes, estimated in June to be $8,500 for the year, payable as follows:
- Quarter 1 = $2,000
- Quarter 2 = $2,000
- Quarter 3 = $2,250
- Quarter 4 = $2,250
If your mortgage company pays your property tax for you, make sure that they are calculating your escrow based on your actual taxes and not just your 3rd and 4th quarter payments.