Annual property taxes are $4,380. The property closes on March 15. If the seller has NOT paid taxes for the current year, how much does the seller owe at closing? (Use 365 days)
Correct Answer
A) $888
Daily rate = $4,380 / 365 = $12/day. Days from Jan 1 to March 15 = 31 + 28 + 15 = 74 days. Seller owes = 74 x $12 = $888.
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Related Topics & Key Terms
Related Topics:
Key Terms:
Related Concepts
Proration is the process of dividing expenses or income between the buyer and seller at the closing of a real estate transaction. This ensures each party pays or receives only their fair share based on the period of ownership.
Daily rate calculation involves determining the cost or income per day by dividing the total amount by the number of days in the period (usually a year or a month). This is a fundamental step in proration.
Determining ownership days involves calculating the number of days each party (buyer and seller) owned the property during the relevant period (usually a year). This calculation is crucial for accurate proration.
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