Real Estate Math
Escrow closes on March 15. Annual property taxes of $6,000 were prepaid by the seller for the full calendar year. Using a 360-day year (30-day months), how much property tax credit does the buyer owe the seller at closing?
A$4,750✓ Correct
B$4,250
C$1,250
D$3,000
Explanation
Seller prepaid through December 31. Remaining days from March 15 to December 31 = 9 months + 15 days = 285 days. Daily rate = $6,000 ÷ 360 = $16.67. Credit = 285 × $16.67 = $4,750. The buyer owes the seller $4,750 for the prepaid taxes.
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