Question 1

What is year-to-date tax proration in Florida?

Accepted Answer

YTD tax proration: the division of property taxes between the buyer and seller in a FL RE closing based on the number of days each party owned the property during the tax year. FL: property taxes are paid in arrears (the tax for the current year is: billed in November and due by March 31 of the following year). At closing: the seller owes taxes from January 1 through the closing date and the buyer owes taxes from the closing date through December 31. The proration: is calculated by dividing the annual tax by 365 days and multiplying by the number of days each party owned the property.

Question 2

How is tax proration calculated in a Florida closing?

Accepted Answer

FL calculation: annual tax / 365 = daily rate. Seller’s share: daily rate x number of days from January 1 to closing date. Buyer’s share: daily rate x number of days from closing date to December 31. Example: annual tax = $5,000; closing date = July 1. Daily rate: $5,000 / 365 = $13.70. Seller’s share (181 days): $13.70 x 181 = $2,479.70. Buyer’s share (184 days): $13.70 x 184 = $2,520.30. At closing: the seller receives a credit for: their share (or the amount is deducted from the seller’s proceeds and credited to the buyer).

Question 3

What happens if the current year’s tax bill is not available at Florida closing?

Accepted Answer

Unavailable bill: if the closing occurs before the current year’s tax bill is issued (bills are issued in November): the proration is based on: the prior year’s tax bill (the most recent available bill). The closing statement: states that the proration is based on: the prior year’s taxes and that: the parties will re-prorate when the current year’s bill is issued. Re-proration: the contract may include: a re-proration clause (requiring the parties to: adjust the proration when the actual tax bill is issued). If the contract is silent: the standard practice in FL is: to use the prior year’s taxes and not re-prorate. The buyer: should factor in potential tax increases when budgeting for the first year of ownership.

Year to Date Tax Proration

FL Year-to-Date Tax Proration

How It Works

Calculation

If Bill Unavailable

Related Terms

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