Quick Answer — How Is Property Tax Prorated at Closing?
Divide the annual bill by the number of days in the tax year to get a daily rate, count the days each party owned the property, and multiply. The seller is responsible through the day before closing and the buyer from closing day onward, which is the convention on almost every settlement statement.
A $6,000 annual bill on a 22 July closing, 365-day year, buyer owning closing day:
- Daily rate — $16.44
- Seller's days — 202, worth $3,320.55 (55.34% of the bill)
- Buyer's days — 163, worth $2,679.45
Which way the money moves depends on when the jurisdiction collects. In arrears, the year is still unpaid at closing, so the seller credits the buyer $3,320.55 and the buyer later pays the whole bill. Paid in advance, the seller has already covered days the buyer will own, so the buyer reimburses the seller instead.
On a 360-day banker year the same closing gives a daily rate of $16.67, 201 seller days, and a seller share of $3,350.00 — $29.45 more. Neither convention is more correct; the contract or local practice decides.