Property taxes are paid annually in November for the preceding calendar year. If the closing is held on August 15, with property taxes of $3,250 prorated, which entry is made on the settlement statement?

To determine the correct entry on the settlement statement for the property taxes that need to be prorated, we start by calculating the daily tax rate of the property taxes and then how much is owed for the portion of the year that the seller is responsible for.

The property taxes for the year are $3,250. Given that property taxes are typically calculated on an annual basis (365 days), the daily tax amount can be determined by dividing the annual tax by the number of days in the year:

[

\text{Daily Tax} = \frac{3,250}{365} \approx 8.90

]

Since the closing is on August 15, we need to assess how many days from January 1 to August 15 have passed. This totals 227 days:

• January: 31 days

• February: 28 days (9 in leap years)

• March: 31 days

• April: 30 days

• May: 31 days

• June: 30 days

• July: 31 days

• August: 15 days

By the time of closing on August 15, the seller is responsible for the taxes covering 227 days. We calculate the total tax for the seller