Tax prorations
The way property taxes get split between buyer and seller at closing, based on the closing date and when taxes are billed in that area. In some states, seller credits buyer at closing.
Your Room opens on going under contract and closing, with the offer and everything before it already ticked.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.
See how it worksWhere this comes up: closing
Part 1 of 4
Why a seller cares
Prorations split the year's taxes by the day at closing, and in arrears-billing states the seller usually credits the buyer for the months already lived. It is often the largest credit on the seller's side of the statement.
Part 2 of 4
A simple example
Taxes of $4,380 a year, billed in arrears. You close on May 31, having owned the home for 151 days this year.
| What is settled | The number |
|---|---|
| The seller's share of this year | 151 days at $12 a day, about $1,812, credited to the buyer |
| Last year's bill, if not yet paid | Paid in full by the seller at closing |
| In an advance-billing state instead | The buyer credits the seller for the days after closing |
The proration follows the calendar and the county's billing cycle, and the closer does the arithmetic.
Part 3 of 4
What people get wrong
That paying last year's bill covers this year. In arrears states the bill you paid was for the year before, and this year's days are still owed.
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 tax prorations 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.