Blog Layout

South Dakota’s property tax system is confusing to a lot of people. Here is what you need to know:


Property taxes are due twice a year, in April and October. The April installment pays the taxes that accrued during the first half of the previous calendar year. The October payment pays the taxes that accrued during the second half of the previous year.


For instance, when you paid property taxes in April of 2014, you paid the tax bill that accrued on your house between January 1st and June 30th, 2013.



There are three times when this system could affect you – when you buy a house, when you sell a house, and when you build a house.


Buy a house. This system feels great. Property taxes are typically prorated to the date of closing, which means the seller will credit you for the taxes that accrued last year when they owned it, since they will be paid this year, when you own it. For instance, if you are buying a house on the last day of January, you will receive a credit of 13 months worth of taxes – 12 months last year plus January. This credit can significantly reduce the amount of money you pay when you close on your house.


Sell a house. You are on the other end of that transaction, paying property taxes forward to the buyer. The prorated taxes will be subtracted from the cash you see when you sell.


Build a house. Since you are paying last year’s property taxes, the first year or so after you build you will only be paying the taxes on the bare lot. That will change about a year after you complete construction. The county will reassess the value of your house after completion, and your ‘real’ property taxes will kick in.


This adjustment always messes up peoples’ escrow accounts. The escrow account is the sidekick account to the mortgage that pays property taxes and homeowners insurance when they come due. Your escrow account won’t see the tax increase coming and it will get overdrawn when the higher taxes kick in. You will need to catch the account up with a one-time payment or spread it out over a number of months.


Bottom line: if you are building a house, expect your payments to increase about a year after your build is complete. Also, save some extra cash to bring your escrow account up to speed once your full property taxes are established.

 


Note: Please do not email personal financial information.

Mortgage Insurance — Sioux Falls, SD — Plains Mortgage

WHAT IS MORTGAGE INSURANCE?

09 Mar, 2018
For many people, paying mortgage insurance is a necessary evil. It goes by a couple different names: PMI (private mortgage insurance) is required on conventional loans, and...
Rural Development — Sioux Falls, SD — Plains Mortgage

THE USDA RURAL DEVELOPMENT LOAN ROCKS

26 Feb, 2018
No down payment, fixed rate, low interest, no mortgage insurance. Rocks. This mortgage is available for people buying houses in eligible areas, basically anywhere outside of major metropolitan regions. I live in...
Mortgage Points — Sioux Falls, SD — Plains Mortgage

WHAT ARE POINTS?

27 Jan, 2018
Look on any site schlepping mortgages & you’ll see the interest rate & how many ‘points’ it takes to get that rate. But that word, ‘points,’ is rarely explained and is often a source of confusion. So here’s the...
Questions About Loans — Sioux Falls, SD — Plains Mortgage

ONE QUESTION

11 Dec, 2017
Here are the top ten questions I’m most often asked by mortgage shoppers (in no particular order)...
Blooper Reel — Sioux Falls, SD — Plains Mortgage

BLOOPER REEL

10 Oct, 2017
Mistakes. Blunders. Mess ups. Me looking like a complete idiot.
Share by: