How this is calculated
This tool prorates a property-tax bill between buyer and seller for the days each owns the home inside the tax period. It establishes the period that contains your closing date, divides the (optionally factored) annual amount by the days in that period to get a per-day rate, counts the days the seller owned, and credits the share to whichever party will pay the eventual bill.
Tax period. The period starts on your tax-year start (Jan 1 calendar, Jul 1 fiscal, or a custom month/day) on or before the closing date and runs one year minus a day — inclusive on both ends, so a normal calendar year is 365 days (366 across a leap day).
Arrears vs advance drives the direction. In arrears states the period's taxes aren't paid yet, so the seller credits the buyer (who pays the bill) for the seller's days — a buyer credit / seller debit. In advance states the seller already paid the full period, so the buyer reimburses the seller for the days the buyer will own — a seller credit / buyer debit.
The closing day is one day of money. By the common custom the seller pays through the day before closing and the buyer owns the closing day; some contracts make the seller responsible through closing day. The toggle covers both — it's a real one-day shift, not rounding.
365-day vs 360-day. 365-day uses the true day count (366 in leap years); 360-day "banker's" treats every month as 30 days. Residential closings usually use 365-day; commercial often uses 360.
Estimate factor. The factor scales the bill before prorating — independent of day counting. Illinois custom is 105% (non-Cook) or 110% (Cook) of the prior-year bill to anticipate increases; everywhere else it's typically 100% (no adjustment).
State presets are editable defaults, not law. Selecting a state sets the conventions to that state's common local custom; within-state variation is real (especially Michigan and Pennsylvania). Override any field to match your contract, and confirm with your title company.
Frequently asked questions
- How do you calculate property tax proration at closing?
- Divide the annual tax (times any estimate factor) by the days in the tax period to get a per-day rate, multiply by the days the seller owned the property, and credit that to the party who will pay the bill.
- Does property tax proration vary by state?
- Yes. Arrears vs advance, calendar vs fiscal tax year, 365 vs 360-day counting, who's charged the closing day, and estimate factors (e.g. Illinois 105%/110%) vary by state, county, and contract. Presets are editable starting points — confirm with your title company.
- What is a seller credit for property taxes?
- In arrears states the seller hasn't yet paid taxes for the days they owned the home, so they credit the buyer (who pays the eventual bill) for that share — shown as a buyer credit / seller debit on the settlement statement.
- Are taxes prorated in arrears or in advance?
- Most U.S. jurisdictions bill in arrears (you pay for a period that has passed), which credits the buyer. Some bill in advance, which credits the seller. California and many PA school districts use a fiscal-year basis.
- What's the difference between 365-day and 360-day proration?
- 365-day uses the real number of days in the year (366 in leap years); 360-day “banker's” treats every month as 30 days. The contract decides; residential usually uses 365-day, commercial often 360.
How to use this calculator
- Enter the basics Annual tax amount and closing date (pick your state to load editable defaults).
- Set the conventions Arrears or advance, tax-year start, 365 or 360-day, who's charged the closing day, and any estimate factor.
- Read the credit Get the proration credit, per-day rate, and day count; copy the line or unlock the branded PDF.