Real Estate Closing Prorations Calculator
Calculate prorations at real estate closing for property taxes, HOA dues, and prepaid utilities using the 365-day method.
How Prorations Work at Closing
Prorations divide ongoing costs between buyer and seller fairly based on closing date. Most common items: property taxes, HOA dues, water/utilities, rents (if income-producing), insurance premiums. The seller pays for all days they owned the property up to closing; the buyer pays from closing day forward. Prorations appear on the HUD-1 / Closing Disclosure as adjustments to the seller's net proceeds. Source: ALTA Closing Protocol, state title company standards. Last updated: May 2026.
365-Day vs 360-Day Method
Two proration methods exist: 365-day: uses actual calendar days. More precise. Used in most US states (NY, NJ, MD, CA, IL, FL). 360-day (Banker's Year): assumes 30-day months. Simpler math. Used in TX, OK, and some commercial closings. The methods differ by only a few dollars on most residential closings — material on commercial deals.
Property Tax Proration Complexity
Tax calendars vary by state. Some pay in advance (FL, GA, CA — first installment due Nov 1 covers Jul 1-Dec 31). Some pay in arrears (IL — bills delayed 12-18 months, complicating prorations significantly). Some use fiscal year (PA — July 1 to June 30). Always reference the local tax calendar and use the actual paid-through date, not the calendar year.
HOA Proration Details
HOA dues are typically paid monthly in advance. If closing mid-month with HOA paid for the full current month, buyer pays seller for the remaining days. Special assessments (large one-time fees) follow the contract — usually seller pays for assessments levied BEFORE closing, buyer pays for those levied AFTER. Read the purchase contract carefully — assessment proration is a common dispute area.
Frequently Asked Questions
What is a property tax proration?
An adjustment at real estate closing that allocates property tax responsibility between buyer and seller based on closing date. Seller pays tax for days they owned the property; buyer pays from closing day forward. Computed as (annual tax / 365) \u00d7 days, with sign depending on whether tax was already paid or not yet billed.
Who pays for property tax at closing?
Depends on state calendar. In states where tax is paid in advance (FL, CA), buyer often credits seller for prepaid days. In states where tax is paid in arrears (IL), seller credits buyer for unpaid days they owed. Title company applies the calculation automatically.
How is HOA proration calculated?
HOA monthly fee \u00f7 30 \u00d7 remaining days in month. Example: $300/month HOA, closing on day 10 of month \u2014 seller paid $300 for full month, owes buyer the remaining 20 days at $10/day = $200 credit to buyer. Some HOAs handle this directly via the new-owner setup.
What is a special assessment proration?
Large one-time HOA fee (roof replacement, parking lot resurfacing). Proration depends on the contract: usually seller pays for assessments LEVIED before closing (regardless of due date), buyer pays for those LEVIED after. Custom negotiation possible. Read contract closely.
Do rent prorations apply?
Yes for income-producing properties. Seller transfers tenant security deposits to buyer at closing. Rent for the closing month is prorated \u2014 seller keeps days they owned, buyer keeps days they own. If month-1 rent was already paid to seller, seller credits buyer for buyer's portion of days.
What is the 360-day vs 365-day proration?
365-day: actual calendar days. Used in most residential closings nationwide. 360-day (Banker's Year): assumes 30-day months. Used in TX, OK, and some commercial transactions. Difference is minor on residential ($5-$30 per closing typically) but can be significant on commercial.