Prorated Property Taxes

Definition

The splitting of annual property taxes between seller and buyer based on ownership duration at closing—a mathematical exercise in dividing the tax burden.

Example Usage

The seller paid prorated property taxes for the six months they owned the home.

Origin

Real estate settlement terminology and standard closing practices

Fun Fact

Proration calculations depend on local tax payment schedules and can significantly affect closing costs.

Source: Real Estate Settlement Procedures Act (RESPA)

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