Property Tax Proration Calculator
Estimate how property taxes will be divided between the buyer and seller at closing. This calculator helps determine credits and debits based on the closing date and tax payment status.
Enter the property and closing details below and click “Calculate Proration”
Understanding Tax Proration
Property tax proration is the process of dividing the annual property taxes between the buyer and seller of a home at the time of closing. Since property taxes are often paid for a period (e.g., annually or semi-annually), this ensures each party only pays for the portion of the tax year they own the property.
How It Works:
- Determine the Tax Period: This could be a standard calendar year (January 1 – December 31) or a fiscal year specific to the local tax authority (e.g., July 1 – June 30).
- Calculate Daily Tax Rate: The total annual tax amount is divided by the number of days in the relevant tax year (usually 365 or 366 for a leap year).
- Seller’s Responsibility: The seller is typically responsible for the taxes from the beginning of the tax period up to (and often including, or sometimes excluding) the day of closing.
- Buyer’s Responsibility: The buyer is responsible for the taxes from the day after the seller’s responsibility ends, through the end of the tax period.
- Credits at Closing:
- If taxes are paid in arrears (meaning they are due at the end of the period for which they are levied), the seller usually gives the buyer a credit for the seller’s portion of the unpaid taxes. The buyer will then pay the full tax bill when it comes due.
- If taxes are paid in advance (meaning the seller has already paid taxes for a period extending beyond the closing date), the buyer usually gives the seller a credit for the buyer’s portion of those pre-paid taxes.
This calculator provides an estimate. Local customs, specific contract terms, and rounding methods can vary. For instance, some regions might use a 30-day month convention for calculations regardless of actual days.