It’s that time of year! Real property taxes in Florida will be assessed any day now. Until they are, calculating tax prorations at closing can be a confusing affair. If you are curious about how tax prorations should work for your closing, please read on.
1. Why we do Tax Prorations for Florida closings.
The main reason we prorate taxes at closing is because your contract demands it. More on that in just a bit. The rationale for this type of contract provision is pretty simple. At closing, the Seller might have paid taxes for a period that extends past the closing date. In this case, the Buyer should credit the Seller for the days during which the Buyer will have owned the property but for which the Seller paid. Alternatively, taxes may be unpaid for a period during which the Seller owned the property but for which the Seller could not have paid because many of our assessments in Florida are paid in arrears. In this case, the Seller should credit the Buyer for that period during which the Seller owned the property but for which the Buyer will pay when that tax becomes due and payable. Make sense? If not, please contact us and we’ll go through it with you.
2. What does your Florida real estate contract say?
It is very likely that your contract demands that certain items be prorated at closing. (Note: If it doesn’t, then there wouldn’t necessarily be any reason to prorate taxes at closing). Most of our Florida residential real estate transactions are controlled by the standard form(s) promulgated by the Florida Association of REALTORS®. The latest form (CRSP-14 as of 9/2015) says the following about prorations: Read the rest of this entry »
