How property taxes are split at closing
Why you may get a credit or owe a charge for property taxes at settlement, and how to check the math on your statement.
No obligation. No pressure. Takes about 2 minutes.
The short answer
At closing, the year's property tax is usually divided by the days each side owns the home. If you've already paid for days after closing, the buyer credits you for them. If the bill for days you owned hasn't been paid yet, you credit the buyer so they can pay it when it comes due. The exact method is set by your contract and the local billing schedule.
Step by step
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1
Find the tax period and what's been paid
Localities bill on different schedules. DC splits its tax year into a first half (October 1 to March 31, due by March 31) and a second half (April 1 to September 30, due by September 15). Baltimore County bills its tax year starting July 1, with semiannual payments for owner-occupied homes.
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2
Work out a daily amount
Divide the bill for the period by the days in it. For example, a $3,650 bill for a 365-day year is $10 a day.
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3
Count your days
Multiply the daily amount by the days you own the home in that period. The contract says whether the closing day counts as yours or the buyer's.
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4
Credit or charge
If you've paid past the closing date, you get a credit for the buyer's days. If the bill for your days is unpaid, you're charged for them and the buyer pays the bill later. If your lender pays taxes from escrow, federal rules say the servicer must return what's left in escrow within 20 business days after the loan is paid in full.
Sources: DC Office of Tax and Revenue, Real Property Tax Bill Due Dates and Delayed Tax Bills · Baltimore County Office of Budget and Finance, Payment Schedules · 12 CFR § 1024.34(b), refund of escrow balance
This is general information, not legal or tax advice. Proration methods depend on your contract and your locality; your settlement agent can walk you through the numbers on your statement.
Cash offer vs listing
Example: a $250,000 home
| Offer | $205,000 |
|---|---|
| Repairs | $0 |
| Commissions | $0 |
| Closing costs | $0 |
| You walk away with | $205,000 |
| In 7 to 14 days | |
| Sale price | $250,000 |
|---|---|
| Repairs | about $8,000 |
| Commissions | about $13,800 |
| Closing and holding | about $6,000 |
| You walk away with | about $222,200 |
| In 60 to 90 days | |
Example only. Your numbers depend on your home and market.
When we show the cash offer next to what listing could net, the tax proration is listed line by line so nothing on the settlement statement is a surprise.
Frequently asked questions
Why is there a property tax credit on my settlement statement?
Usually because you've already paid taxes for days after closing. The buyer reimburses you for those days.
Why am I being charged property taxes at closing?
Usually because the bill covering the days you owned the home hasn't been paid yet. You credit the buyer for your days, and they pay the bill when it comes due.
When are DC property taxes due?
DC's first half covers October 1 to March 31 and is due by March 31; the second half covers April 1 to September 30 and is due by September 15. Delayed bills get adjusted due dates.
Who are you?
We are real estate investors based in Baltimore, helping homeowners since 2016. We buy houses directly for cash. We are not a licensed real estate brokerage and do not list homes ourselves; if listing could get you more, we show you the math so you can choose.