Tax Proration

An allocation of the property taxes between a home seller and home purchaser that is determined by their contract. It is not required, but it is customary. The most commonly used proration is the “due date in advance” method. For example, when you pay your tax bill on December 1st, it is treated as buying government services for the period starting on December 1st and ending on November 30th of the following year. In a transaction closing on February 1st, the purchaser will reimburse the seller 10/12ths of the previous December’s tax bill. Why? Because the purchaser will occupy the property for ten months out of the 12-month period that started on the previous December 1st.