How a Georgia tax bill is built
Georgia ad valorem tax is not a percentage of market value. Property is valued as of January 1, then O.C.G.A. 48-5-7(a) assesses it at 40 percent of fair market value. Exemptions come off the assessed value, and the millage rate is applied to what is left. One mill equals $1 per $1,000 of assessed value.
Worked example
A home with a fair market value of $300,000, a standard $2,000 homestead exemption under O.C.G.A. 48-5-44, and a 30-mill rate:
- Assessed value: $300,000 × 40% = $120,000
- Net assessed value: $120,000 − $2,000 = $118,000
- Tax: $118,000 × 0.030 = $3,540.00
Forgetting the exemption gives $3,600. Applying the millage to the full $300,000 gives $9,000, or $8,940 if you subtract the exemption from full value. Always take 40 percent first.
Applying for homestead
O.C.G.A. 48-5-45 lets the owner apply up to the closing of the books for the return of taxes, April 1. Late filing waives the exemption for that year. Once granted, it "shall automatically be renewed from year to year so long as the owner continuously occupies the residence."
A buyer who applies in May has lost the exemption for the current year but will have it going forward. The exemption does not attach automatically on recording the deed, there is no reapplication every April 1, and December 20 is the common bill payment date, not the exemption deadline.
Prorating taxes at closing
Georgia practice uses a 365-day year unless the question says otherwise.
Worked example: annual tax $3,650, closing September 15, tax accrued but unpaid. Per diem = $3,650 ÷ 365 = $10.00. Days January 1 through September 15 = 31 + 28 + 31 + 30 + 31 + 30 + 31 + 31 = 243, plus 15 = 258 days. Seller's share = 258 × $10 = $2,580.00.
Because the tax is unpaid and the buyer will pay the whole bill when it arrives, that amount is a debit to the seller and a credit to the buyer. Reversing the entries would be right only if the seller had already paid. The 360-day method would give 255 days and $2,550, which Georgia practice does not use unless told to.