Annual property taxes are $4,380. The property closes on March 15. If the seller has NOT paid taxes for the current year, how much does the seller owe at closing? (Use 365 days)
Question & Answer
Review the question and all answer choices
$888
$912
This option incorrectly calculates the daily rate as $12 but uses 76 days instead of 74, adding two extra days to the calculation (possibly including March 15 or miscounting days).
$876
This option results from using 73 days instead of 74 (likely missing March 15 or counting February as 27 days), leading to an underpayment of the seller's tax obligation.
$900
This option appears to be a rounded figure that doesn't match the precise calculation. It might result from using an approximation method or incorrectly calculating the daily rate as $12.16.
Why is this correct?
Daily rate = $4,380 / 365 = $12/day. Days from Jan 1 to March 15 = 31 + 28 + 15 = 74 days. Seller owes = 74 x $12 = $888.
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