Property tax
The tax the county charges on real estate every year, based on the assessed value and the local mill rate. Usually paid twice a year, or monthly through the mortgage escrow.
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See how it worksWhere this comes up: closing
Part 1 of 4
Why a seller cares
Taxes are prorated at closing so each side pays for the days they owned, and whether you credit the buyer or they credit you depends on how your county bills. It is usually a real number on the settlement statement.
Part 2 of 4
A simple example
Annual taxes of $3,650 in a county that bills in arrears. You close on day 200, and you have owned the home for 200 of this year's 365 days.
| How the county bills | What the proration does |
|---|---|
| In arrears, the bill comes next year | You credit the buyer about $2,000 for your 200 days |
| In advance, already paid this year | The buyer credits you for the remaining 165 days |
| Through your mortgage escrow | The same proration; the escrow balance comes back to you separately |
Property tax is settled by the day at closing, and the direction depends on the county's calendar.
Part 3 of 4
What people get wrong
That the escrow account pays the proration. The proration is between you and the buyer; the escrow refund comes from the lender later.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines property tax in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.