Definition
Property taxes are split at closing—the seller pays their portion through the closing date, you pay from then forward. It's calculated daily so each party pays fairly for days owned.
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Property taxes are typically paid annually and don't align with the closing date, so a tax proration ensures each party pays for the time they own the property. The calculation uses a daily tax rate (annual taxes divided by 365 days, or the actual number of days in a leap year). The settlement statement will show either a credit to the buyer (if the seller paid more than their share) or a debit to the buyer (if the seller paid less).
Pro Tip
Verify property tax amounts with the county assessor before closing for accurate proration.
Example
Annual property taxes are $3,600 ($9.86 per day). The property closes April 15. The seller owned the property for 105 days (January 1-April 14), owing: $9.86 × 105 = $1,035.30. The buyer credits this amount to the seller at closing.