How do you prorate property taxes at closing when ownership begins mid-year?

• A. Proration = (Annual Taxes / 365) × days from closing to year-end; buyer pays post-closing days, seller for pre-closing days (per local practice)
• B. Proration = (Annual Taxes / 12) × months from closing to year-end
• C. Proration = (Annual Taxes / 365) × days from year-end to closing
• D. Proration = Annual Taxes × 365 / 12

Answer: (A)

Prorating property taxes at closing is about allocating the yearly tax burden based on how many days each party owns the property in the current year. You start with a daily tax amount by dividing the annual tax bill by 365. Then multiply that daily amount by the number of days from the closing date through December 31. The buyer pays for the days after closing and the seller for the days before closing, with the closing statement reflecting a debit to one party and a credit to the other accordingly. This per-day method gives a precise, fair split for mid-year closings.

Using months (annual taxes divided by 12) loses precision for mid-year closings. Counting days from year-end to closing is the wrong direction, and multiplying by 365/12 inflates or deflates the amount in a way that doesn’t match actual ownership days.