Posted by: islamicfinancingnews | May 6, 2012

Paying property taxes can be part of your Islamic mortgages

Part of understanding Islamic finance that includes Islamic mortgages is whether to pay municipal property taxes from your own resources or as part of your mortgage payment.

When it comes to paying property taxes, some individuals receive their tax bill in the mail and pay it responsibly by the due date while others make arrangements to have tax payments automatically withdrawn from their bank account when due. Other people make tax installments as part of their monthly mortgage payment.

In the latter case, the bank redirects the tax portion of each mortgage payment you make into a tax account which continues to grow until such time as the municipality in which you live automatically deducts the tax amount owing.

In order to ensure there is enough money in the tax account to pay taxes when due, the bank usually increases the tax payment by up to 50% in the first year of the mortgage to build up the account, gradually decreasing the tax portion of your mortgage over time. By controlling the payments, the bank ensures your taxes are paid up to date.

As a homeowner, you have many financial responsibilities each month. Paying your property taxes as part of your mortgage payments could be one less thing to worry about. Talk to your lender about the various Islamic finance options available to you including Islamic mortgages.


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