Calculate the seller's prorated share of property taxes at closing. Divide annual taxes by days to determine exact seller responsibility through closing date.
When you sell a home, property taxes are prorated between buyer and seller based on the closing date. The seller is responsible for taxes from the beginning of the tax period through the closing date, and the buyer takes over from that point forward. This proration ensures neither party pays for the other's ownership period.
The calculation seems simple — divide the annual tax by 365 and multiply by the number of days owned. But complications arise from different tax year conventions: some jurisdictions prorate based on the calendar year, others on the fiscal tax year, and some handle prepaid vs. arrears taxes differently. Most US property taxes are paid in arrears, meaning you pay for the prior period.
This calculator handles the most common scenario: prorating based on the days the seller owned the property during the current tax period. Enter your annual tax, the start of the tax period, and the closing date to see the exact seller share.
Tax proration is a standard closing item but the exact amount depends on your closing date and local tax conventions. Getting this right ensures you're not overpaying. Even a week difference in closing date changes the proration by $50–$150 for a typical property. Instant recalculation lets you compare scenarios side by side, so every buying, selling, or investment decision is grounded in solid financial analysis.
Daily Tax Rate = Annual Tax / Days in Tax Period Seller Days = Closing Date − Tax Period Start Date Seller Share = Daily Tax Rate × Seller Days Buyer Share = Annual Tax − Seller Share
Result: Seller owes $1,709.59 (105 days)
Annual tax of $6,000 / 365 days = $16.44/day. From Jan 1 to Apr 15 = 105 days. Seller share: 105 × $16.44 = $1,726.03. Buyer covers the remaining 260 days ($4,273.97). The seller's share is deducted from proceeds or credited to the buyer at closing.
Tax proration ensures fairness: neither buyer nor seller should pay taxes for days they didn't own the property. At closing, the title company calculates the exact split and either credits the buyer (if taxes are owed by the seller) or credits the seller (if taxes were prepaid beyond closing).
In an arrears state, the seller typically owes a credit to the buyer at closing because taxes for the seller's ownership period haven't been paid yet. In a prepaid state, the seller may receive a credit because they've already paid taxes beyond the closing date. The closing disclosure shows the exact amounts.
Disputes sometimes arise when tax bills change significantly from the prior year (reassessment, new levies). Re-proration clauses in the purchase agreement protect both parties by allowing adjustment when the actual bill arrives. Without this clause, the initial proration is final.
Proration divides the property tax bill between buyer and seller based on their respective ownership days during the tax period. The seller pays for the days they owned the property, and the buyer pays for the rest. This is calculated and applied at closing.
Most US jurisdictions collect property taxes in arrears, meaning you pay for the prior period. For example, a December payment covers July–December. Some states (California, for instance) collect semi-annually with different due dates. Check your local convention.
If the current year's tax bill isn't available, proration is typically based on the prior year's tax amount. The purchase agreement may include a re-proration clause that adjusts the amounts once the actual bill is issued.
The later in the tax period you close, the more days the seller is responsible for. Moving a closing from April 15 to May 15 adds about 30 days of tax responsibility for the seller — roughly $500 on a $6,000 annual tax bill.
Some states use a 360-day year (30 days per month) for proration calculations, while others use the actual 365-day calendar. The difference is small but can amount to $20–50. Your closing attorney or title company will use your state's convention.
The proration method is typically dictated by local custom and the purchase agreement. However, the exact closing date (which affects the split) is negotiable. In some markets, the seller pays through the day before closing; in others, through the closing date itself.