A closing occurs on September 15. The seller prepaid annual property taxes of $7,300 on January 1. Using a 365-day year and the day of closing belonging to the buyer, how much does the buyer owe the seller for the tax proration?
Correct Answer
D) $2,160
Seller owns Jan 1 through Sep 14 = 31+28+31+30+31+30+31+31+14 = 257 days. Buyer owns Sep 15 through Dec 31 = 365-257 = 108 days. Daily rate = $7,300/365 = $20/day. Buyer owes seller = 108 x $20 = $2,160.
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