Reference no: EM132243736

Question 1
 
Since property taxes are paid in arrears, the buyer will be responsible for paying them after closing. Suppose that the closing date on the home for sale is February 11 and the day of closing belongs to the buyer. How many calendar days would the seller be responsible for when calculating his/her share of the property tax owed for the year in which the home was sold?

Question 2

Show how you calculated the number of days in the previous question.

Question 3
 
Certain closing costs will be prorated to account for the period of time during which the seller occupied the house. Assume the annual tax amount is $5,875.  Calculate the daily tax amount, assuming a 365-day year.
Show your answer to 2 decimal points.

Question 4
 
Show how you calculated the daily tax amount in the previous question.

Question 5
 
You are the buyer and are getting ready to close on your new home. The closing date is scheduled for March 3. The tax bill is due to arrive after closing and you will be responsible for paying that bill in full post-closing. After discussions with the seller, you have agreed that the date of closing will be yours. Based on last year's taxes and the historical rate of growth, you estimate the tax bill will be $8,700. Assuming a 365-day year, determine how the tax bill will be prorated.

In the box below, enter the prorated amount of taxes that the seller will pay at closing to cover her share of the tax bill.

(hint: start by counting how many days each party is responsible for paying this calendar-year expense; and remember the day of sale belongs to the buyer)

Question 6
 
Show your work from the previous question. How did you calculate the number of days that the seller is responsible for this tax expense?
This is your chance to get partial credit for this assignment. Even if you made an error on the previous question, if you can show that you know how to solve this part of question, you can still get some credit.
Show your work.

Question 7
 
Show your work from the proration problem above. How did you calculate the daily tax amount from this proration problem?
This is your chance to get partial credit for this assignment. Even if you made an error on the previous question, if you can show that you know how to solve this part of question, you can still get some credit.
Show your work.

Question 8
 
Now, pull together the previous few problems and show how you calculated the seller's prorated tax amount for this problem.
Show your work.