Land records · Parcel maps · October 7, 2026
Prorated Property Tax at Closing Explained
How prorated property tax at closing works: buyer and seller split the year's taxes by days owned, with credits shown on the settlement statement.
Prorated property tax at closing is the division of the current year’s property taxes between buyer and seller according to how many days each owns the property during the tax period. Because taxes are billed once or twice a year, and closings happen any day, the settlement agent calculates each side’s share and applies credits on the closing statement. Whether the buyer or seller receives a credit depends on whether taxes for the period have already been paid and whether taxes in that area are paid in advance or in arrears. This page is general land-records background, not legal advice.
Basic calculation
- Find the annual tax amount, using the current bill or an estimate.
- Compute the daily rate: annual tax divided by 365, or by 360 in some markets.
- Count the seller’s days from the start of the tax period through the day before or the day of closing, depending on local custom.
- Multiply to get the seller’s share.
- Apply credits depending on what has been paid.
Paid in advance vs in arrears
| Situation | Typical result |
|---|---|
| Seller already paid the full year | Buyer credits seller for buyer’s days |
| Taxes paid in arrears and not yet due | Seller credits buyer for seller’s days |
| Partial payments made | Credits adjust for amounts paid |
In many states, taxes are paid in arrears, meaning the bill for this year comes due next year. In that case, the seller gives the buyer a credit, and the buyer pays the full bill later.
Where it appears
Prorations appear on the Closing Disclosure or settlement statement as adjustments, either as a credit to buyer and debit to seller, or the reverse.
Estimates and reprorations
When the current year’s bill is not yet issued, agents often prorate using last year’s bill. Some contracts call for reproration when the actual bill arrives; others make the estimate final. Read the purchase contract.
What is not prorated
Delinquent prior-year taxes are paid by the seller in full. Supplemental tax bills tied to the buyer’s new value usually are not prorated. Special assessments may be handled separately under the contract.
After closing
Buyers should confirm who will pay the next bill, update the mailing address with the tax office, and set up a property tax escrow if the lender requires one. See how to read a property tax bill.
Example
Annual taxes are $3,650, or $10 per day. Closing is on April 30, and the seller owned the home for 120 days of the tax year. If taxes are paid in arrears and none have been paid, the seller credits the buyer $1,200. The buyer then pays the full bill when it comes due.
Common mistakes
Using the wrong tax year, missing an exemption that will drop off after sale, or forgetting installment payments already made can throw off the numbers. Ask the closing agent to show the calculation.
Bottom line
Prorated property tax splits the year’s taxes between buyer and seller based on days owned, with credits on the closing statement. Who credits whom depends on whether taxes are paid in advance or arrears. Check the contract for reproration terms and confirm who pays the next bill. Find county tax offices via the Platbookmapper map.
Prorated property tax at closing FAQ
How are property taxes prorated at closing?
By dividing the annual tax by days and splitting by days each party owns the home.
Why did I get a credit for property taxes?
Taxes may be paid in arrears, so the seller credits the buyer.
Is proration based on 365 days?
Usually, though some areas use 360.
What if the tax bill is not out yet?
Agents usually use last year’s bill as an estimate.
Are supplemental bills prorated?
Usually not.