What is a property tax proration?
A property tax proration divides a tax bill between the seller and buyer based on the portion of the tax period each party owns the property. At closing, the proration normally appears as a debit to one party and a credit to the other so the economic burden follows the agreed ownership period.
How this calculator works
The calculator divides the tax amount by the number of calendar days in the tax period to determine a daily tax amount. It then counts seller and buyer days using the closing-date assignment you select. When taxes are unpaid, the seller portion is generally shown as a seller debit and buyer credit because the buyer may later pay the bill. When taxes have already been paid, the buyer portion is generally shown as a buyer debit and seller credit.
Information to verify before closing
- The correct tax bill or estimated tax amount for the applicable period.
- Whether the bill is paid in advance or arrears.
- The exact tax-period dates used by the taxing authority.
- Whether the purchase contract assigns the closing date to the buyer or seller.
- Any local proration convention that differs from straight calendar-day proration.
Property tax proration FAQ
Does the buyer or seller get the closing day?
That depends on the purchase contract and local closing custom. The calculator lets you assign the closing date to either party so you can match the transaction.
What if property taxes are paid in arrears?
When a tax bill is still unpaid and the buyer will pay it later, the seller's accrued share is commonly handled as a seller debit and buyer credit. Confirm the actual settlement treatment for the transaction.
Can I use a fiscal tax year instead of January through December?
Yes. Enter the actual beginning and ending dates for the tax period shown by the taxing authority.