What will be the seller's credit for property taxes if they paid $960 annually and sell before March 1?

To determine the seller's credit for property taxes when they sell before March 1, it's essential to calculate the portion of the property taxes that applies to the time the seller owned the property in that tax year.

The property taxes for the year are $960 annually, meaning that the monthly tax amount is calculated by dividing the annual amount by 12, which results in $80 per month.

If the seller sells the property before March 1, they would typically owe for the months of January and February, which amounts to two months of taxes. Therefore, for January and February (2 months x $80 per month), the total amount owed is $160.

Conversely, they have paid the entire year's taxes of $960 upfront. Consequently, to calculate the credit for property taxes due to early sale, we subtract the amount for the two months from the annual tax amount:

$960 (annual payment) - $160 (amount owed for January and February) = $800.

Thus, the seller's credit for the property taxes at the time of closing would be $800. This demonstrates the concept of prorating property taxes based on the time of ownership for the year in question, ensuring that only the appropriate proportion of taxes