annual taxes on a home are $2,800. the home is sold with a closing date of april 10th. the property taxes…

annual taxes on a home are $2,800. the home is sold with a closing date of april 10th. the property taxes are based on a fiscal year from july 1 through the following june 30th. they are paid in one installment which is due on january 1st. assume actual days, 365 - day years and that the seller is responsible for the closing date. what will be the tax proration at settlement? select one: a. buyer pays the seller $2,178.63. b. seller pays the buyer $2,178.63. c. buyer pays the seller $621.37. d. seller pays the buyer $621.37.

annual taxes on a home are $2,800. the home is sold with a closing date of april 10th. the property taxes are based on a fiscal year from july 1 through the following june 30th. they are paid in one installment which is due on january 1st. assume actual days, 365 - day years and that the seller is responsible for the closing date. what will be the tax proration at settlement? select one: a. buyer pays the seller $2,178.63. b. seller pays the buyer $2,178.63. c. buyer pays the seller $621.37. d. seller pays the buyer $621.37.

Answer

Explanation:

Step1: Calculate daily tax rate

The annual tax is $2800. The daily - tax rate is calculated by dividing the annual tax by the number of days in a year. So, the daily tax rate $r=\frac{2800}{365}\approx7.6712$ dollars per day.

Step2: Determine the number of days the seller is responsible for

The fiscal year is from July 1 to June 30. The closing date is April 10. The number of days from July 1 to March 31: July (31 days)+August (31 days)+September (30 days)+October (31 days)+November (30 days)+December (31 days)+January (31 days)+February (28 days, non - leap year)+March (31 days) $=31 + 31+30 + 31+30+31+31+28+31=274$ days. The number of days in April up to the 10th is 10 days. So, the total number of days the seller is responsible for $n = 274+10=284$ days.

Step3: Calculate the seller's share of the taxes

The seller's share of the taxes $S$ is the daily tax rate times the number of days the seller is responsible for. So, $S = 7.6712\times284\approx2178.63$ dollars. Since the seller has already paid the full - year tax on January 1 and is only responsible for 284 days, the buyer should pay the seller the amount that the buyer will be using the property for.

Answer:

A. Buyer pays the seller $2,178.63.