California Real Estate Practice Exam

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How is the proration for real estate taxes calculated if the property closes on November 1 with taxes due January 1 for the previous six months?

  1. The buyer gets a credit of $400; the seller gets a debit of $800

  2. The buyer gets a credit of $800; the seller gets a debit of $400

  3. The buyer and seller both get a credit of $600

  4. No proration is necessary

The correct answer is: The buyer gets a credit of $400; the seller gets a debit of $800

In this situation, the proration for real estate taxes is based on the number of days the property was owned by each party. The buyer would receive a credit of $400 for the two months (November and December) that they will own the property and the seller would receive a debit of $800 for the four months (July, August, September, and October) that they owned the property. Option B would result in an incorrect proration, as it would give the buyer a larger credit and the seller a smaller debit than what is necessary. Option C would also result in an incorrect proration, as both parties would receive the same credit instead of being based on the number of days owned. Option D is also incorrect, as proration is necessary in this situation to ensure that each party pays their fair share of the real estate taxes for the time they owned the property. Therefore, option A

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