Question

On February 1, a seller paid $1,140 in annual property tax for the current calendar year. He sold the house with the closing set for April 1. What will be the seller's credit for the property taxes already paid if the buyer pays for the day of closing? Use a 360-day year and a 30-day month.

Answer 1

Given:

Annual property tax = $1,140

Number of days = 91

To find:

Seller's credit for property tax

Solution:

The following is the calculation of the seller credit for property taxes,

$\text{Seller credit for property taxes} = \text{Total tax}\times \frac{\text{Number of days}}{360}$

On plugging-in the values we get,

$\text{Seller credit for property taxes} = \ 1,140\times\frac{91}{360}$

$\Rightarrow \ 1,140\times0.25278 = \ 288$

Therefore, the seller's credit for property taxes is $288.