Under Illinois closing practice, how are real estate tax prorations typically handled on a settlement statement?
Correct Answer
C) Tax prorations are listed as a separate, identified credit or debit to the appropriate party on the settlement statement.
In Illinois, real estate taxes are paid in arrears, meaning the seller typically owes taxes for the portion of the year they owned the property before closing. Standard Illinois closing practice — and RESPA requirements for applicable transactions — requires that this proration be disclosed as a clearly identified credit to the buyer and debit to the seller on the settlement statement. This transparency allows both parties to verify the calculation and ensures the buyer is compensated for taxes they will later pay covering the seller's ownership period.
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