What is 100 tax proration

what is 100 tax proration


100 Club

Registered: 03/17/08

Posts: 223

Loc: The Texas Hill Country

o.k. so hopefully you'll bear with me here. I read the other thread and am still unclear. Let's say we have a contract and the loan is scheduled to close in October. We know that taxes will have been billed by then and the entire amount of taxes will be due for the year.

Let's say the full year of taxes is $1200. We know that the current owner will be responsible for payment of ten months or so of this tax bill - maybe not based on the contract but because that's how the proration of taxes works - let's say $1,000. Can you dumb this down for me and tell me what amount you think we would show in the Prepaids section F and then how

we might adjust for the seller credit for their portion of the tax bill or if we simply do not do that?

Would we just show the 2 months we think the borrower will pay? Do we show 12 months since the entire tax bill must be paid - and if so, no seller credit or 10 mos seller credit (and if so, where?)? I feel like I'm being very dense but if I"m trying to come up with true cash to close it seems I need to account for the seller portion of the tax bill somewhere on the LE.

In a situation where the tax bill hasn't been issued and taxes are current, I'm assuming we don't account for property taxes anywhere on the LE? Even the eventual credit for the sellers prorata portion?

Thanks for your patience on this.


Source: www.bankersonline.com

Category: Taxes

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