An Ohio property closes on September 15. The annual tax is $7,200 (paid semi-annually: first half covers Jan-Jun, second half covers Jul-Dec). The seller has NOT yet paid the second-half installment due in July. Using a 365-day year, how should the tax proration appear on the settlement statement?
Correct Answer
D) Seller credit to buyer of $1,517.81 for Jul 1 through Sep 15
The second-half installment ($3,600) covers Jul 1 - Dec 31 (184 days). The seller owned from Jul 1 to Sep 15 = 77 days. Seller's share = $3,600 × 77/184 = $1,506.52. However, using daily proration on annual tax: Daily rate = $7,200 / 365 = $19.726. Jul 1 to Sep 15 = 77 days. Seller owes = 77 × $19.726 = $1,517.81 (credit to buyer for unpaid portion).
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