In Iowa, how are property taxes typically prorated at closing?
Correct Answer
B) The seller is credited or debited for taxes accrued through the date of closing
Iowa property taxes are paid in arrears, meaning taxes for a given fiscal year (July 1–June 30) are paid the following fall and spring. At closing, the seller is typically debited for the portion of taxes accrued from the start of the tax period through the closing date, and that amount is credited to the buyer to cover the future tax bill.
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Related Topics & Key Terms
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Related Concepts
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
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