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Real Estate Closing Property Tax Settlement Question

Hello,
 
Will someone explain how I can verify my tax proration for a home purchase closing on October 10, 2012.
 
The property is located in Southfield MI, & I believe the taxes are prorated based on when due.
 
I think the Closing Agent has calculated based on the taxes being paid in advance. Based on the following taxes & my closing date, please tell me how much I should be paying for the tax proration.
 
2012 Summer Tax $3,056.86  due 08/27/2012
2011 Winter Tax  $733.54   due 12/27/2011
 
Thanks In Advance,
Uni
  • October 04 2012 - Southfield
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Answers (2)

This is being posted merely as my experience and opinion ... NOT as a legal expert and/or a closing authority.  I am an authority in real estate, but neither taxes or insurance.

It is customary in SE Michigan for purchasers to reimburse sellers for property taxes that are paid in advance, which is how we pay our tax bills.  Summer and Winter bills each over a 12 month period (Summer due July 1st with a grace period that goes into September depending on where you live; Winter due December 1st with a grace period that goes into February depending on where you live.)  Thus, follow this hypothetical...

Summer tax bill   $2,000   due July 1st.
Winter tax bill $1,000 due December 1st.
Closing occurs on October 1st.

SO (assuming all taxes are paid current by seller), the buyer would reimburse the seller for taxes in advance for 9 months of the summer bill, and 2 months of the winter bill.  Thus, approximately $1,700 total in necessary reimbursed taxes.
  • October 04 2012
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As Derek stated this is just an opinion.  In most places in Oakland county taxes are paid in advance.  Bills are due July 1st and December 1st with grace periods to pay these. You have incorrectly stated that the taxes are due on September 27 and December 27.  These are the end of the grace periods.  Taxes are pro-rated from July 1st and December 1st.  So you would be reimbursing the seller from the closing date to June 30, 2013 and November 30, 2013 or possible July 1st and December 1st, 2013 depending on how the title company calculates.

So again this is an estimate based on my opinion and not my expertise in legal matters or closings. Based on the figures you quote for the taxes your reimbursement would be approximately $2211.00 for summer taxes and $105.00 for winter taxes.

I hope this helps.
  • October 06 2012
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