Question

Mr. Jones, the seller, paid the yearly county taxes of $720. Closing was held on October 10th. How much should Jones be reimbursed for taxes at closing?

a) $320
b) $360
c) $400
d) $480

Answer 1

Mr. Jones should be reimbursed for the taxes he paid for the period after closing, which is $1.9726 per day for 82 days, equaling $161.75. The closest answer option is $320.

Step-by-step explanation:

To determine how much Mr. Jones should be reimbursed for taxes at closing, we need to calculate the amount of taxes he prepaid for the period after the closing date, October 10th. Since property taxes are paid yearly, we have to figure out Mr. Jones's tax responsibility from January 1st to October 10th and the remaining part of the year for which the buyer should be responsible.

We know there are 365 days in a non-leap year. October 10th is the 283rd day of the year (assuming it is not a leap year). So Mr. Jones would have paid for 283 days, and the buyer would be responsible for the remaining 82 days (365 - 283 = 82). To find the daily tax rate, we divide $720 by 365 days, which equals approximately $1.9726 per day.

Mr. Jones should be reimbursed for the 82 days he will not own the property. Thus, we multiply the daily tax rate by 82: $1.9726 x 82 = $161.75 (rounded to the nearest cent).

Therefore, the answer closest to this calculation is option (a) $320.