About the Property Tax Proration Calculator
When a home sells partway through a tax year, the buyer and seller each owe property tax for the days they own it. Because the tax bill is usually paid either before the period (in advance) or after it (in arrears), one side has paid — or will pay — the other’s share, and the difference appears as a credit on the Closing Disclosure or settlement statement. This calculator works out that proration.
Enter the annual tax, the start of the tax period, the closing date and who owns the closing day. Choose whether the seller has already paid the year’s bill (the buyer reimburses the seller for the rest of the year) or whether the taxes are unpaid and due later (the seller credits the buyer for the days the seller owned the home). You can use an actual-day (365/366) or a 360-day banker’s year.
It suits buyers, sellers, agents and closing staff checking a settlement statement. Local custom varies: some areas prorate on the prior year’s bill, use a fiscal year starting July 1, or let the seller own the closing day, so match the settings to your contract.
With the default inputs, the proration credit at closing is $2,712.33. Change any value above to recalculate instantly.
How to use the property tax proration calculator
- 1Enter the annual property tax from the latest bill or estimate.
- 2Enter the start date of the tax period and the closing date.
- 3Choose whether taxes are unpaid (in arrears) or already paid by the seller.
- 4Pick who owns the closing day and the day-count method in your contract.
- 5Read the credit and confirm it matches your settlement statement.
Formula and method
The tax period runs one year from the start date you enter. Seller days are counted from the start of the period up to the closing date; if the seller owns the closing day, that day is added. The buyer is charged the remaining days. Each party’s share is its days multiplied by the daily tax.
If taxes are paid in arrears or are still unpaid, the buyer will pay the full bill later, so the seller credits the buyer with the seller’s share at closing. If the seller has already paid the full year, the buyer reimburses the seller for the buyer’s share. The 360-day option uses the US 30/360 convention, treating every month as 30 days.
- seller days
- Days from period start to closing (plus the closing day if the seller owns it)
- days in period
- Actual days in the tax year, or 360 on a banker’s year
Worked examples
$6,000 calendar-year tax, closing June 15, taxes in arrears
From January 1 to June 14 the seller owns the home for 165 days (the buyer owns June 15). Daily tax is $6,000 ÷ 365 = $16.44, so the seller’s share is $2,712.33. Because the bill is paid in arrears, the seller credits the buyer $2,712.33 at closing.
Seller prepaid a July–June fiscal year, closing October 1
The fiscal year runs July 1, 2026 to June 30, 2027 (365 days). The seller owns July 1 – September 30 (92 days). Having paid the full $4,800, the seller is reimbursed for the buyer’s 273 days: $4,800 × 273 ÷ 365 = $3,590.14.
360-day year, seller owns closing day
Under 30/360, January 1 to June 15 is 164 days plus the closing day owned by the seller, 165 days. At $6,000 ÷ 360 = $16.67 a day the seller’s share and credit is $2,750.
Frequently asked questions
How are property taxes prorated at closing?+
Divide the annual tax by the days in the tax year to get a daily amount, then multiply by the days each party owns the home. The party that did not pay its share — or will not pay the bill — credits the other on the settlement statement.
Who pays property taxes on the day of closing?+
In most US transactions the buyer owns the home on the closing day and pays that day’s tax, but some contracts and states assign it to the seller. Check the proration clause in your purchase agreement.
What does paid in arrears mean for property taxes?+
It means the bill for a period is paid after the period ends, as in many US states. At closing the seller has not yet paid for the time they owned the home, so they credit the buyer, who later pays the full bill.
What if the current year’s tax bill is not out yet?+
Contracts commonly prorate using the most recent bill or an estimate, sometimes with a percentage cushion. Some agree to re-prorate once the actual bill is issued; others treat the closing proration as final.
Does an escrow account change the proration?+
No. The proration settles the buyer’s and seller’s shares for this tax period. Separately, the buyer’s lender may collect several months of tax upfront to fund the new escrow account, which is not a proration credit.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.