Question

When real estate is sold, the year's property taxes are allocated to the vendor and the purchaser in proportion to the number of days that each party owns the property during the year. If the purchaser took possession of a property effective August 8 (of a 365-day year), how will the year's property taxes of $2,849 be allocated to the vendor and purchaser? (Round your answers to the nearest cent.) Vendor's share $ Purchaser's share $

Answer 1

Number of days from January 1 to August 7

= January ( 31 ) + February ( 28 ) + March ( 31 ) + April ( 30 ) + May ( 31 ) + June ( 30 ) + July ( 31 ) + August ( 7 )

= 219 days

So, Vendor will share the costs for 219 days

So, Purchaser’s share

= 365 days – Vendor days

= 365 days – 219 days

= 146 days

So, cost allocation for vendor

= Total cost x Vendor Days / Total days

= $2,849 x 219 / 365

= $1,709.40

So, cost allocation for purchaser

= Total cost x Purchaser Days / Total days

= $2,849 x 146 / 365

= $ 1,139.60