Question

Taxes on the property Buyer Alan is purchasing are $3,200 due on December 31. If the closing is set for October 15, using the 365-day method, how much of the taxes will be credited to the buyer? (Assume it is not a leap year and the day of closing belongs to the seller.)

Answer 1

Answer: $2524.93

Step-by-step explanation:

Tax amount = $3,200

Closing date = October 15th

Due date = December 31st

Note : Date of closing belongs to seller

Using the 365-days method ;

Daily tax amount = ($3200 ÷ 365)

Daily amount = $8.76712328767

Therefore, seller's share of the tax, to be credited to Alan is

$3200 - (October 16 to December 31) tax charges

(October 16 to December 31) = 77 days

47 days taxes = $8.767 × 77= $675.06849315

Amount to be credited to Alan :

$3200 - $675.06849315 = $2524.93