Property Tax Proration Calculator

Frequently Asked Questions

Who pays property taxes at closing - buyer or seller?

Both pay their proportional share based on days owned. In arrears states, the seller credits the buyer; in advance states, the buyer credits the seller.

What is the difference between the 365-day and 360-day methods?

The 365-day method divides by actual calendar days. The 360-day method assumes twelve 30-day months (annual tax / 360). Results differ slightly, especially near month-end. Your contract specifies which to use.

What happens if the tax assessment changes after closing?

The buyer typically absorbs any increase because they own the property for the remainder of the year. Buyers in reassessment-pending situations should negotiate a larger seller credit.

Do I need to prorate special assessments too?

Special assessments are typically not prorated the same way. Whether they transfer to the buyer or remain with the seller is usually addressed separately in the purchase contract.

Is property tax proration handled by the title company or attorney?

Yes. Title companies and closing attorneys calculate and apply prorations on the settlement statement. Verify their calculation matches what you agreed to in the contract.

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How It Works

At a real-estate closing the year's property tax is split between seller and buyer based on the closing date - this is proration. The daily tax = annual tax divided by days in the year. The seller owes tax for the days they owned the home through the closing date; the buyer owes the remainder of the year.

Two calculation methods exist: the calendar method uses actual days (365 or 366 in a leap year); the banker's 360-day method assumes twelve 30-day months, used in some commercial contracts. Whether the resulting credit flows from seller to buyer or buyer to seller depends on whether your jurisdiction bills property taxes in arrears (after the period) or in advance.

Key Metrics

Arrears billing (most common): The tax bill comes at the end of the period after the seller has already owned the property. At closing, the seller credits the buyer for the seller's share so the buyer can later pay the full annual bill. Common in Texas, Illinois, and most other states.

Advance billing: The tax was already prepaid by the seller before closing. The buyer credits the seller for the buyer's share of the prepaid period. Common in California and some other states.

Calendar (365/366) method: Uses actual days. Most common for residential transactions in the US.

360-day (banker's) method: Assumes 12 months of exactly 30 days. Used in some commercial contracts and a few jurisdictions. Produces slightly different results near month-end.

Tips

Always confirm the proration method specified in your purchase contract - your settlement statement will be calculated exactly per the contract terms.

Use the prior year's tax bill as the starting estimate if the current year's assessment has not yet been issued, but note that a recent reassessment could significantly change the actual amount.

Reconcile the proration line on your closing disclosure (or ALTA settlement statement) against this calculator before signing.

If there is a pending tax appeal that might reduce the assessment, negotiate how any refund will be split in the purchase contract.

In arrears states, the seller's credit at closing increases your escrow reserve requirement as a buyer - factor this into your cash-to-close calculation.

FAQ

Who pays property taxes at closing - buyer or seller?

Both pay their proportional share based on days owned. The credit flows in whichever direction is needed to reflect that split. In arrears-billing states, the seller credits the buyer because the seller has not yet paid for the period they owned the property. In advance-billing states, the buyer credits the seller for their share of the prepaid period.

What is the difference between the 365-day and 360-day methods?

The 365-day method divides the annual tax by actual calendar days (365 or 366). The 360-day method assumes twelve 30-day months, giving a daily rate of annual tax divided by 360. The methods produce slightly different results, especially for closings near the end of a month. Your contract specifies which to use; when it is silent, local custom governs.

What happens if the tax assessment changes after closing?

If the tax bill after closing is different from the amount used for proration (due to a reassessment, corrected assessment, or pending appeal), the buyer typically absorbs any increase because they own the property for the remainder of the year. For this reason, buyers in reassessment-pending situations should negotiate a larger seller credit or an escrow holdback.

Do I need to prorate special assessments too?

Special assessments (for sidewalk repair, sewer lines, etc.) are typically not prorated the same way as regular property taxes. Whether they transfer to the buyer or remain with the seller is usually addressed separately in the purchase contract and should be discussed with your closing attorney or agent.

Is property tax proration handled by the title company or attorney?

Title companies and closing attorneys calculate and apply prorations on the settlement statement. They determine the daily rate and apply it based on the closing date. You should verify their calculation matches what you agreed to in the contract.

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