Question 1

What is tax proration at closing in Florida?

Accepted Answer

Tax proration: the allocation of property taxes between the buyer and seller at closing based on the number of days each party owns the property during the tax year. In Florida: property taxes are paid in arrears (the tax year runs January 1 to December 31; taxes are due November 1 and delinquent April 1 of the following year). At closing: the seller is responsible for taxes from January 1 through the closing date, and the buyer is responsible from the closing date through December 31. The proration: is calculated as a credit to the buyer.

Question 2

How is tax proration calculated in Florida?

Accepted Answer

Calculation: the annual tax amount is divided by 365 (or 366 in a leap year) to get the daily rate, the daily rate is multiplied by the number of days the seller owned the property (January 1 through the day before closing), and the result is the seller’s share (credited to the buyer at closing). Example: annual taxes $6,000; closing May 1; seller’s share = $6,000 / 365 x 120 days (Jan 1 to Apr 30) = $1,972.60 credit to buyer. Note: if the current year’s taxes are not yet determined: the proration is based on the prior year’s taxes (with an adjustment after the current year’s taxes are issued).

Question 3

What is the tax proration dispute between buyer and seller in Florida?

Accepted Answer

Disputes: estimated vs. actual (the proration at closing is based on the prior year’s taxes; if the current year’s taxes are higher: the buyer receives less credit than they should; some contracts provide for a post-closing adjustment), exemptions (if the seller had a homestead exemption: the taxes were lower; after the sale: the exemption is removed and the taxes increase; the buyer may not have factored this into their calculations), and new construction (if the property was recently built: the prior year’s taxes may have been assessed on vacant land; the current year’s taxes will be much higher). The FAR/BAR contract: addresses tax proration in a specific provision.

Tax Proration at Closing

Tax Proration at Closing in Florida

How It Works

Calculation

Disputes

Related Terms

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