100% p&t tax exempt question

[metallicide]

This is all fairly new to me. I turned in my paperwork for property tax exemption to my local tax assessor and informed my mortgage company. They didnt seem to have a lot of answers. Does the property tax stop the day I filed it? Really confused on how this works. 

[vetquest]

We had to pay our insurance for the year upfront when we bought our house in Tennessee but it was refunded after I filed for the property tax exemption.

[Vync]

On 12/6/2019 at 11:43 AM, paulstrgn said:

When I got 100 P&T the effective date was 8/2018 (I won a BVA decision in 7/2019). Now I live in Virginia and when I turned in all the paperwork to the county and then sent it to my mortgage company, the mortgage company adjusted my payment to eliminate the property tax. I am also going to get a refund from the state back to 8/2018. 

But long story made  short, your tax liability should stop as soon as the mortgage company processes the paperwork.

Congratulations on getting to 100% P&T!

I asked about this when I became 100% P&T and was told it was only effective going forward. It has been some years now, so I think I will ask my tax assessor again and ask them to point me to the law stating it could not be applied retroactive to the effective date.

[paulstrgn]

1 hour ago, Vync said:

I asked about this when I became 100% P&T and was told it was only effective going forward.

It may be different for each state. I was very surprised that they processed a property tax refund for 2019 and also 2018 (back to Aug.), I was really expecting at best only 2019. Virginia also has a personal property tax and they also refunded back to August 2018. It's not a lot of money, but it does work out to about $3K for the house and $800 for the personal property tax. Needless to say extra money like that is nice to get around the holidays.

Vync hopefully you can get some extra money back, good luck.

[broncovet]

Short version: 

You are unlikely to get "retro" on your back property taxes, AT LEAST not till next year.  

Long version:    .   Property taxes are paid IN arrears.  (You dont owe taxes on property you do not yet own).  This means you will be paying (or maybe have already paid) 2018 property taxes in 2019.  So, if you apply for the exemption in 2019, it will reduce/eliminate 2019 taxes, payable in year 2020.  You wont be getting "back taxes" at least, not in my state.  

Further, here is how mortgage companies work.  Even tho taxes are paid "in arrears" your mortgage company collects 1/12 of a years taxes IN advance, so they can pay the full year's taxes when due, 12 months from now.  You should have enough money in your tax escrow account to pay next years taxes by paying your mortgage (which includes principle, interest, 1/12 of taxes each month, plus 1/12 of insurance each month).  There ARE loans which dont escrow for taxes, but most do, and your mortgage payment likely collects taxes and insurance with each mortgage payment, then they pay those when due from your "taxes and insurance mortgage escrow account".  

Mortgage companies do an analysis each year for taxes and insurance.  Taxes and insurance can go up, or down, and you could owe some after a year, or you could have a positive escrow balance and get a check or apply it to pay off your mortgage sooner.  

So, what happens is you apply for an exemption, and KEEP making the same mortgage payment you always do for a year.  Then, if your tax exemption is approved (it should be), then you could get a check back, or apply it to reduce your mortgage at your discrection, NEXT year.  

My mortgage company "does a mortgage analysis" in April of each year, yours may do it then or at another time.  I have gotten checks from them because my taxes went down, but not until the following April.  I have no idea when your mortgage company does their escrow analysis.  

An escrow analysis is needed because "they estimate" your future taxes, usually based on the previous year.  Municipalities LOVE to raise taxes so house payments often go up when they do, but it takes a while.  In our case, they can and do go down, when we apply and receive the disabled Vets property tax exempltion, that is, if your state has one.  It looks like your state does:

https://www2.illinois.gov/rev/localgovernments/property/Pages/disabledveteraninfo.aspx

The same is true for your homeowners insurance.  My insurance went down about 300 per year because I changed to a less expensive insurance.  I could have gotten a check for 300 the following year, but elected, instead,  to pay down my principal balance so I would pay off my mortgage sooner.  

My guess your state and mortgage company will be similar, but their could be differences, but I dont think there will be much difference.  

My state has an option to pay property taxes every six months or 12 months.  It all comes out in the wash, but, if I recall, in my state "you either qualify for the exemption for disabled Vets the whole year or you dont.  They dont "pro rate" it, that is, give you the exemption for 3 months.  You have a deadline to apply for the disabled vets exemption, and my state, I think is by July 1. If you apply for the exemption by July 1, 2020, then you get an exemption for the full year.  If you dont apply by that deadline, you dont get the tax break until the following year.  

And, in my state they dont care if VA takes 20 years to process your claim and your effective date was 1943.  You still dont get the exemption until you apply for it BY the deadline.  You dont get property taxes back.  They say they already spent that money on our schools..so what are they gonna do..ask the teachers to pay back their salary back to 1943, because you got an 1943 effective date?  I dont think so.  

If you pay your mortgage payments IN FULL for the next year, in 12-18 months or so, you could get a check back FROM YOUR MORTGAGE COMPANY NEXT year.  

Edited December 9, 2019 by broncovet

[paulstrgn]

Is how I did mine, when I found out I was 100% P&T I contacted the county tax assessor to let them know and they told me what I had to file and submit. I submitted the letter from eBenefits that showed I was 100% P&T along with the effective date along with completing an online application. I had also asked for a letter to submit to my mortgage company. Once I received the paperwork from the county, I then submitted it all to my mortgage company and I asked that they run a new escrow analysis. My mortgage company pays 1/2 the property tax in June and the other half in December. The mortgage company is in the process of mailing me the second half of the property tax that was still in the escrow account. 

For the rest of the property tax (first half of 2019 and Aug 2018 - Dec 2018) to be sent back from the county to the mortgage company and then they will send it to me. This will take several months to receive all the money, I do not mind waiting needless to say. They also told me what my new house payment would be after they ran the escrow analysis.    

As Bronco stated all this depends on the state you live in.

[Vync]

@paulstrgn Here in Alabama, they don't have an online application. We just take the 100% P&T award letter to the tax assessor and they make a copy. After that, towards the end of each year they mail out a tax assessment, I check the appropriate boxes, and they notify the mortgage company to not collect the taxes. Back around 2012 or 2013 when I won P&T, the difference dropped my mortgage bill by around $300/month. However, my effective date was back to around 2008 or 2009, so it is significant and I hope they can refund that back to me. I know if you owe taxes to the state they will go back as far as legally allowed, so the reverse should also be true.

I'll do some digging and report back. Other Alabama vets who also qualify might be able to take advantage of this too.