A residential property in Colorado has an actual value of $600,000. The residential assessment rate is 6.95% and the total mill levy is 100 mills. The closing date is April 1. Colorado property taxes are paid in arrears. What is the seller's tax proration credit owed to the buyer at closing? (Use a 365-day year; the seller is responsible for January 1 through March 31 = 90 days.)
Correct Answer
B) $1,028
Assessed value is $600,000 x 6.95% = $41,700. Annual tax is $41,700 x 100 mills / 1,000 = $4,170. Using the stated 365-day year and seller responsibility for January 1 through March 31 (90 days), the seller credit is $4,170 x 90 / 365 = $1,028.22, which rounds to $1,028.
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A Colorado broker is closing a transaction on March 15. The seller has already paid the first half of the property taxes (due February 28) but has not yet paid the second half (due June 15). The annual property tax is $3,600. How should the property taxes be handled at closing?
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