Are Property Taxes Paid in Arrears?

If you own a home, you know that property taxes are one of the most consistent bills you have to pay. However, have you ever questioned, “Are property taxes paid in arrears?” That means you’re paying the taxes after living in the house for a year. It may sound a bit puzzling at first, but it’s actually pretty simple.

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In this article, we’ll clarify what it means to pay property taxes this way, why most places do it like this, and what it means for both homeowners and people buying a home.

What Does “Paid in Arrears” Mean?

“Paid in arrears” just means you’re paying for something after it has already happened. When it comes to property taxes, this means you pay taxes after you’ve already lived in the home for the year the bill covers.

Example:
You are paying property taxes for 2025, not 2026, if your bill is due in November 2025.

Yes, in most U.S. states, property taxes are paid in arrears, which means they are paid for the year before instead of the future.

Why Are Property Taxes Paid This Way?

There are a few simple reasons why taxes are paid after the fact:

Time to Calculate the Home’s Value
Local governments need time to figure out how much your home is worth before they can tell you how much tax you owe.

Planning for Local Services
The money from property taxes helps pay for schools, roadwork, police, and other local services. By collecting taxes after the year ends, local officials know what was spent and can plan better for next year.

Fairness for Everyone
Everyone pays for the time they actually owned or lived in the home. That keeps things fair across the board.

When Do You Pay Property Taxes?
It depends on where you live, but here are the common payment schedules:

Once a year
Twice a year
Four times a year

Even if you pay in parts, the bill always covers time that has already passed, not the future.

What If You’re Buying or Selling a House?

This is where it can get a bit confusing, but let’s keep it simple.
When you sell a home, you still owe taxes for the time you owned it. But because those taxes aren’t due until later in the year, the buyer will end up paying the full bill unless something is done at closing.

Example:

You sell your home in August.
The full tax bill is due in November.
You owe for January through August.
The buyer owes from September through December.

What Happens?

At closing (when the home sale becomes official), the seller gives the buyer credit for the part of the taxes they owe. So, when the buyer pays the full tax bill later, they’ve already been reimbursed for the seller’s portion.

This keeps everything fair, and it’s usually handled by the title company or attorney helping with the home sale.

What If You Pay Property Taxes Through Your Mortgage?

Many people don’t pay the tax bill directly. Instead, their mortgage company collects a little money each month and sets it aside to pay the taxes when they’re due. This is called an escrow account.

How It Works:

You pay your mortgage each month.
Part of that goes into a separate account (escrow).
When the tax bill comes, your lender pays it from that account.

Even though you’re paying every month, the actual bill is still paid once or twice a year, and still for time that has already passed.

What Consequences Come from Not Paying Property Taxes?

Not paying your property taxes allows the local government to claim your home by placing a tax lien. You will not be able to refinance your mortgage or sell the home until all the payments are complete. An unpaid tax bill can put your house at risk of being sold by the government.

As a result, you should try to make your payments by the deadline, no matter if you manage the funds yourself or allow an escrow service to do it.

Do All States Pay Property Taxes in Arrears?

Most states do—but there are some differences. The due dates and how often you pay can vary depending on your state or even your county.

Here are a few examples:

California – You pay twice a year, for the current year.
Texas – You pay once a year in January, for the past year.
Illinois – The taxes are paid a full year later (you pay 2024 taxes in 2025).

The best way to know your local rules is to check with your county tax office or look at your last property tax bill.

Recap: What You Need to Know

Let’s sum it all up:

Property Taxes Are Paid in Arrears: Yes, property taxes are usually paid in arrears, meaning after the year has passed.
Assessment Comes First: Local governments need time to calculate your home’s value before they send the tax bill.
Shared Responsibility at Closing: Buyers and sellers share the tax responsibility at closing based on how long each owned the home.
Escrow Accounts Offer Support: Escrow accounts can help homeowners stay on top of tax payments.
Unpaid Taxes Have Consequences: If taxes go unpaid, the local government can take legal action.