Final answer:
To determine the seller's share of the annual property tax of $1750 by the May 1st closing date, calculate the daily tax rate based on a statutory year and multiply by the number of days the seller owned the property. The seller owes approximately $583.
Step-by-step explanation:
The question deals with the apportioning of property taxes between the seller and the buyer due to a real estate transaction closing on May 1st. Assuming the property tax for the year is $1750 and has not yet been paid, we must calculate what portion of the tax the seller owes up until the closing date. Since the closing is on May 1st, the seller is responsible for the portion of the property taxes that accrued from January 1st to April 30th.
First, we determine the daily tax rate by dividing the total annual property tax by the number of days in a year. A statutory year is used for tax proration, consisting of 360 days (30 days per month for 12 months). Therefore, the daily tax is calculated as $1750 divided by 360 days, which equals approximately $4.86 per day.
Next, we calculate the number of days the seller is responsible for, which is from January 1st to April 30th. The total is 120 days (4 months x 30 days per month). Multiplying the daily tax rate by the number of days gives us the seller's share of the property tax.
$4.86 per day x 120 days = $583.20
The seller's portion of the property tax is therefore approximately $583 (rounded to the nearest dollar). This amount will be credited to the buyer at closing to cover the seller's portion of the property tax liability for the year.