Understanding Property Tax Prorations

Through the process of a closing, your Alliance Title escrow officer will prorate property taxes to the date of the closing. Typically, the seller pays the property taxes for each day they own the home during the tax year. The buyer will then pay the property taxes for each day they own the home for the remainder of the tax year. Your escrow officer will make sure these tax prorations are properly calculated.

Property tax year and property tax installment dates vary from state to state, so it’s important to know how tax prorations are calculated in the state(s) where you conduct real estate transactions. The following are the property tax year and property tax installment dates for the states Alliance Title serves:

  • Idaho – The property tax year is January 1st through December 31st. The first half of property taxes become due on December 20th and the second half of property taxes become due on June 20th of the following year.
  • Montana – The property tax year is January 1st through December 31st. The first half of property taxes become due on December 1st and the second half of property taxes become due on June 1st of the following year.
  • Washington – The property tax year is January 1st through December 31st. Property taxes become due on April 30th and October 31st of each year.

The following is a demonstration on how a tax proration would be calculated in the State of Idaho for a closing date of March 15th.

Annual tax bill is $1,200 (January 1st through December 31st)

$1,200 divided by 365 days = $3.2877 per day

January 1st through March 15th = 74 days

74 x $3.2877 = $243.29, which is charged to the seller and credited to the buyer

In this scenario, the seller would be responsible for the property taxes from January 1st to the closing date. The buyer would be responsible for the taxes from the closing date through December 31st.

If you would like more information about tax proration calculations or to inquire about a specific transaction, contact your local Alliance Title representative.

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