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12 April, 01:02

Taxes on the property Buyer Alan is purchasing are $3,200 due on December 31. If the closing is set for October 15, using the 365-day method, how much of the taxes will be credited to the buyer? (Assume it is not a leap year and the day of closing belongs to the seller.)

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  1. 12 April, 01:31
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    Answer: $2524.93

    Explanation:

    Tax amount = $3,200

    Closing date = October 15th

    Due date = December 31st

    Note : Date of closing belongs to seller

    Using the 365-days method;

    Daily tax amount = ($3200 : 365)

    Daily amount = $8.76712328767

    Therefore, seller's share of the tax, to be credited to Alan is

    $3200 - (October 16 to December 31) tax charges

    (October 16 to December 31) = 77 days

    47 days taxes = $8.767 * 77 = $675.06849315

    Amount to be credited to Alan:

    $3200 - $675.06849315 = $2524.93
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