Question

Real estate taxes for a property are based on an assessed value of $25,000 and the tax rate is $.085. Taxes for the current year have been pre-paid for the year. A sale of the property closes on June 15. On the basis of the thirty-day method, the approximate proration is:

Options:
A) $531.25
B) $625.00
C) $437.50
D) $468.75

Answer 1

The proration of real estate taxes using the thirty-day method can be calculated by multiplying the tax rate by the assessed value and then dividing by 365 to determine the daily rate. This daily rate is then multiplied by the number of days remaining in the current year.

Step-by-step explanation:

The proration of real estate taxes for a property can be determined using the thirty-day method. In this case, since the sale of the property closes on June 15, there are 15 days remaining in the current year. The proration amount can be calculated by multiplying the tax rate ($.085) by the assessed value ($25,000) and then dividing by 365 (to determine the daily rate). Finally, multiplying the daily rate by the number of days remaining (15) gives the approximate proration.

Using the formula:

Proration = (Tax Rate * Assessed Value) / 365 * Number of Days Remaining

Proration = ($.085 * $25,000) / 365 * 15

Proration ≈ $437.50

Therefore, the approximate proration using the thirty-day method is approximately $437.50, which corresponds to option C.