Finance
Florida real estate transactions commonly use 'HUD-1 proration' for property taxes because Florida taxes are paid in arrears. If the annual property tax is $4,380 and closing is August 15, how much does the seller owe the buyer as a property tax proration credit?
A$2,555✓ Correct
B$2,408
C$2,190
D$1,825
Explanation
Daily tax rate = $4,380 ÷ 365 = $12/day. Seller owes for January 1 through August 14 (the day before closing). Days: January 31 + February 28 + March 31 + April 30 + May 31 + June 30 + July 31 + August 14 = 226 days. Seller's proration = 226 × $12 = $2,712. If using 360-day year: $4,380 ÷ 360 = $12.167/day. The
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