DoorlarkHow proration works
Property tax is split by days. Each side pays for the days it owns the home in the tax year. What changes is who has already paid:
- Paid in arrears (the bill comes after the year): the buyer will pay the whole bill later, so the seller credits the buyer for the seller's days.
- Paid in advance (the seller already paid the year): the buyer pays the seller back for the days after closing.
Daily tax = yearly tax ÷ days in the tax year Seller's days = tax year start → day before closing (+1 if seller owns closing day) Seller share = daily tax × seller's days Buyer share = yearly tax − seller share
Worked example (the default numbers)
| $4,800 yearly tax, calendar year, closing June 15, 2026 | 365 days |
| Daily tax: $4,800 ÷ 365 | $13.1507 |
| Seller's days: Jan 1 to Jun 14 | 165 |
| Seller's share: 165 × $13.1507 | $2,169.86 |
| Buyer's share | $2,630.14 |
| Paid in arrears: seller credits buyer | $2,169.86 |
The same deal with taxes paid in advance flips it: the buyer pays the seller $2,630.14 at closing.
Three places prorations go wrong
- Prorating on the seller's bill when it will change. The proration uses the current bill, but the buyer's future bills may be higher after a sale resets the assessment or the seller's exemption drops off. Warn your buyer, and see why the first bill can jump.
- Mixing up the tax year. Some counties and school districts run July to June or another fiscal year. Change the start date to match the bill.
- Forgetting what the contract says. Some contracts prorate on the last known bill, some on an estimate, and some re-prorate when the real bill arrives. Read the tax clause in your state form.
What to tell your seller
"Taxes here are paid after the year ends, so you'll credit the buyer about [amount] at closing for the months you owned the home. It's already in the net sheet, so it won't be a surprise."
An estimate for planning. Title or escrow figures the official proration from the actual bill and your contract.
Sources
- CFPB, Closing Disclosure explainer (adjustments for items paid by seller in advance and unpaid by seller)
- CFPB, Regulation Z §1026.38(j)–(k), Closing Disclosure summaries of transactions
Checked Oct 30, 2026.
Related free tools and guides
- Seller Net Sheet Calculator: what the seller walks away with, line by line.
- Seller Concessions Calculator: the most a seller can credit on conventional, FHA, VA and USDA loans.
- Agent Net Income Calculator: your take-home per deal and per year after split, cap, costs and a tax set-aside.
- Assumable Mortgage Calculator: equity gap and real monthly savings on a VA or FHA assumption.
FAQ
How do you prorate property taxes at closing?
Divide the yearly tax by the days in the tax year to get a daily amount, then multiply by the days each side owns the home. If taxes are paid in arrears, the seller credits the buyer for the seller's days. If the seller already paid, the buyer pays back the days after closing.
Who pays property tax on the day of closing?
It depends on local custom and the contract. In many areas the buyer owns closing day. This calculator lets you pick either.
What does paid in arrears mean?
The bill for a tax year comes after the period it covers. At closing the seller hasn't paid for their days yet, so they credit the buyer.
Where does the proration show up?
On the Closing Disclosure, under adjustments for items unpaid by the seller or paid by the seller in advance.
Does Doorlark save my numbers?
No. The calculator runs in your browser and nothing is sent to us.
By Doorlark Editorial Team. For planning only, not legal, tax or financial advice.