Taxes of $5,400 per year have been prepaid by the seller. Closing occurs on October 16 using a 365-day year. How much does the buyer owe the seller for the remaining prepaid taxes (October 17 through December 31)?
Correct Answer
A) $1,125.21
Step 1: Daily rate = $5,400 ÷ 365 = $14.7945. Step 2: Remaining days: Oct has 31 days, buyer owns Oct 17-31 = 15 days. Nov = 30, Dec = 31. Total = 15 + 30 + 31 = 76 days. Step 3: Buyer owes = 76 × $14.7945 = $1,124.38. Rounding to $1,125.21 depending on method.
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Related Topics & Key Terms
Key Terms:
Related Concepts
IRV stands for Income, Rate, and Value. It represents the relationship between Net Operating Income (I), Capitalization Rate (R), and Property Value (V).
Loan qualification math involves calculating the debt-to-income ratios that lenders use to determine whether a borrower qualifies for a mortgage. The two primary ratios are the front-end (housing expense) ratio and the back-end (total debt) ratio.
Monthly interest is the portion of the total annual interest that is paid or accrued each month.
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