Property taxes cover a period of time, but homes change hands on a single day. Proration splits the period's tax so the seller pays for the days they owned the home and the buyer pays for the rest. Who writes the check depends on whether the seller has already paid the bill.
How the calculation works
- Daily rate = the tax for the full period ÷ the days in the period (365 or 366 with actual days, or 360 with the 30/360 method).
- Seller's days run from the first day of the period up to the closing date. If the buyer owns the closing day, the seller's days stop the day before closing. If the seller owns it, they include closing day.
- Buyer's days are the rest of the period.
- Who credits whom. If the seller paid in advance, the buyer credits the seller for the buyer's days. If the bill is unpaid (paid in arrears), the seller credits the buyer for the seller's days, and the buyer pays the whole bill later.
Worked example
The annual tax is $9,125 for calendar year 2026. Closing is November 15, 2026, and the contract says the buyer owns the closing day.
| Method | Daily rate | Seller days | Buyer days | Credit if seller prepaid | Credit if unpaid |
|---|---|---|---|---|---|
| Actual days (365) | $25.00 | 318 | 47 | $1,175 to seller | $7,950 to buyer |
| 30/360 | $25.35 | 314 | 46 | $1,166 to seller | $7,959 to buyer |
With actual days, January 1 through November 14 is 318 days, so the seller's share is 318 × $25.00 = $7,950 and the buyer's share is 47 × $25.00 = $1,175. If the seller already paid the full $9,125, the buyer reimburses $1,175. If nothing has been paid, the seller hands the buyer $7,950 at closing and the buyer pays the $9,125 bill.
Edge cases to check
- Installment bills. If taxes are billed quarterly or semi-annually, prorate only the installment that covers the closing date, and only for what has actually been paid. Enter that installment's amount and dates as a custom period.
- Fiscal-year taxes. Some places bill on a fiscal year rather than the calendar year. Use the fiscal preset or custom dates that match the bill.
- Bill not issued yet. When the new bill is not out, contracts often use the last known bill. Ask whether there will be a re-proration when the real bill arrives.
- Co-ops. Co-op owners pay the building's taxes through maintenance, so there is usually no separate property tax proration. Ask your closing agent how the month's maintenance is split.
- Escrow is separate. Your lender may also collect months of taxes to start your escrow account. That is not the proration.
Next steps
Compare the proration with your Closing Disclosure, then add it to your full cash-to-close with the NYC closing cost calculator. Sellers can plug the credit into the seller net proceeds calculator. To see how taxes flow into a new mortgage payment, try the escrow calculator.