On February 1, a seller paid $1,140 in annual property tax for the current calendar year. He sold the house with the closing set for April 1.

On February 1, a seller paid $1,140 in annual property tax for the current calendar year. He sold the house with the closing set for April 1. What will be the seller's credit for the property taxes already paid if the buyer pays for the day of closing? Use a 360-day year and a 30-day month. Answer: $288

Expert Solution

As per the rule, the credit of Annual Property Tax to the seller and the buyer will be prorated among both of them on the basis of time of their ownership existence. This means up to 31^st March (i.e., closing day minus one) will be given credit to the seller because the seller has paid for the period and has sold the house and afterwards he in not said to be owner of that property. This kind of prorated tax was needs to be calculated to grant Property tax Credit to both of them to their time of ownership spent.

Therefore, answer will be 1,140*(30+30+30)/360 = $285 and $288 if (31+29+31) is taken for Jan to March

ekkarill92 answered 2 years ago

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