Question

Suppose a property has estimated real estate taxes for the current year of $4,398.25 dollars and that taxes are paid at the end of the year. If the property is   
being sold on May 25 in a year with 365 days and the buyer and seller agree to prorate the taxes at the time of closing with the buyer being responsible for the
day of closing, what amount will be charged to the seller on the settlement statement?

$1,000.00

$1,735.20

$2,663.05  

None of the above

Answer 1

Answer:

Correct answer is:

None of the above.

Explanation:

The property is being sold on May 25. The seller is responsible for property tax prorated amount for 4 months and 24 days (closing day excluded).

The amount charged to the seller on the settlement statement = (Annual property tax amount / 12) * (4 + 24/30)

= $4,398.25/12 * (4 + 24/30)

= $1,759.30

As such option D is correct and other options A, B and C are incorrect.