Real estate proration calculator
Enter the amount and the closing date. You get the proration, the side it goes on and the steps an exam answer would show.
Proration
$1,992.00
Debit the seller, credit the buyer.
- On a 365-day year, January 1 through the closing day (closing is June 15) is 166 days.
- Daily tax: $4,380.00 ÷ 365 = $12.00.
- Seller's share: $4,380.00 × 166 ÷ 365 = $1,992.00.
- The taxes are unpaid and the buyer will pay the whole bill, so debit the seller and credit the buyer.
How a proration works
- Count the seller’s days: January 1 through closing, or the day before if the buyer owns the closing day.
- Find the daily amount: the yearly figure ÷ 365 or 360.
- Multiply by the days of the party who owes.
- Whoever paid for days they will not own is credited; the other party is debited.
Example: unpaid taxes, 365-day year
Taxes of $4,380 for the year are unpaid. Closing is June 15 and the seller owns the day of closing.
- On a 365-day year, January 1 through the closing day (closing is June 15) is 166 days.
- Daily tax: $4,380.00 ÷ 365 = $12.00.
- Seller's share: $4,380.00 × 166 ÷ 365 = $1,992.00.
- The taxes are unpaid and the buyer will pay the whole bill, so debit the seller and credit the buyer.
$1,992.00: debit the seller, credit the buyer.
Example: prepaid taxes, 360-day year
The seller paid $3,600 of taxes for the whole year. Closing is September 20 and the seller owns the day of closing.
- On a 360-day year (30-day months), the seller is charged January 1 through the closing day (closing is September 20): 260 days.
- The buyer's share is 360 − 260 = 100 days.
- Daily tax: $3,600.00 ÷ 360 = $10.00.
- Buyer's share: $3,600.00 × 100 ÷ 360 = $1,000.00.
- The seller already paid the whole year, so debit the buyer and credit the seller.
$1,000.00: debit the buyer, credit the seller.
Now try it on exam questions
The free state quiz has 20 questions, math included, and takes 25 minutes. No account.
Questions people ask
How do you calculate a tax proration for the real estate exam?
Count the days the seller owned the property this year, divide the yearly tax by 365 or 360 as the question says to get a daily amount, and multiply. For unpaid taxes, debit the seller and credit the buyer.
What is the difference between a 365-day and a 360-day proration?
A 365-day year counts actual calendar days. A 360-day year, the banker's year, gives every month 30 days. Exam questions state which to use.
Who pays for the day of closing?
The question says. If the seller owns the day of closing, the seller is charged through the closing date; if the buyer owns it, the seller is charged through the day before.
Is a tax proration a debit or a credit?
Both. Unpaid taxes are a debit to the seller and a credit to the buyer. Taxes the seller prepaid are a debit to the buyer and a credit to the seller.