If the closing occurs on the 15th of a month when taxes are due, how is the tax proration typically handled?

The tax proration in real estate transactions is typically calculated based on the number of days each party owns the property during the tax period. This method ensures a fair distribution of tax liability between the buyer and the seller.

In the scenario where the closing occurs on the 15th of the month, the seller is responsible for the first half of the month, while the buyer takes responsibility for the second half. This division of responsibility reflects the actual period of ownership for each party, allowing for a precise and equitable adjustment in the closing costs.

Using this approach, the prorated taxes would be calculated by determining the total amount due for the month and allocating it based on the ownership duration: the seller would pay for their portion of the month (from the 1st to the 15th) and the buyer would cover their portion (from the 15th to the end of the month). This fair method ensures that neither party is unfairly burdened with the other’s tax responsibility.

Other options propose unbalanced or incorrect approaches to handling taxes that do not accurately reflect the time of ownership and could lead to disputes or inequities in the transaction.