Annual real estate taxes are 4,745. The seller pays taxes in arrears for the preceding calendar year. If closing occurs on July 15, what is the prorated tax amount the buyer owes at closing?

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Multiple Choice

Annual real estate taxes are 4,745. The seller pays taxes in arrears for the preceding calendar year. If closing occurs on July 15, what is the prorated tax amount the buyer owes at closing?

Explanation:
Prorate taxes based on the portion of the year the buyer owns the property after closing. Since taxes are paid in arrears, the buyer covers the period from the day after closing to year-end. Daily tax amount = 4,745 / 365 ≈ 13.00 Days buyer owns after closing (July 16–Dec 31) = 169 days Prorated amount = 169 × 13.00 ≈ 2,197 The buyer owes 2,197 at closing.

Prorate taxes based on the portion of the year the buyer owns the property after closing. Since taxes are paid in arrears, the buyer covers the period from the day after closing to year-end.

Daily tax amount = 4,745 / 365 ≈ 13.00

Days buyer owns after closing (July 16–Dec 31) = 169 days

Prorated amount = 169 × 13.00 ≈ 2,197

The buyer owes 2,197 at closing.

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