Property tax proration is how a Florida closing splits one year's tax bill between the seller and the buyer. Florida taxes are paid in arrears: the tax year runs January 1 through December 31, the bill goes out in November, and it isn't delinquent until April 1 of the next year. On most sales, then, the current year's taxes are still unpaid at closing, and the seller credits the buyer for every day the seller owned the home.
How the Florida contract figures it
The Florida Realtors/Florida Bar purchase contracts set the method:
- Taxes are prorated through the day before closing. The seller pays for January 1 through that day, and the buyer pays from closing day on.
- The proration uses the current year's tax when it's known. If it isn't, the closing agent uses the current assessment with last year's tax rate, or last year's tax bill when the new assessment isn't out yet.
- The figure allows for the largest early-payment discount and any exemptions in place. Under section 197.162 of the Florida Statutes, the discount is 4% for paying in November, 3% in December, 2% in January and 1% in February, and March pays the full amount.
- An estimate can be redone at either party's request once the actual bill arrives.
A worked example
A home's tax bill is $4,350 for the year, and closing is on June 15. The seller owned the home from January 1 through June 14, which is 165 days (31 + 28 + 31 + 30 + 31 + 14).
| Step | Math | Amount |
|---|---|---|
| Bill after the 4% November discount | $4,350 × 0.96 | $4,176.00 |
| Tax per day | $4,176 ÷ 365 | $11.4411 |
| Seller's 165 days, credited to the buyer | 165 × $11.4411 | $1,887.78 |
The buyer receives a $1,887.78 credit on the Closing Disclosure, which lowers the cash to close. In November, the buyer's escrow account pays the full discounted bill of $4,176, so the seller's share has already been handed over.
When closing happens late in the year, after the seller has already paid the bill, the math flips: the buyer pays the seller back for the days from closing through December 31.
What it means for your payment next year
The proration is based on the seller's bill, which may include the seller's homestead exemption and years of the Save Our Homes cap. The assessed value resets after a sale, so your own bill the next year is usually higher. Your lender plans your escrow payment on the new figure. File for your own homestead exemption by March 1 after your first January 1 in the home to bring that bill down.
The cash to close calculator shows how a seller's tax credit lowers what you bring on closing day. For a closing statement with the tax proration figured on the exact home and date you're looking at, call AAA Capital Funding at 888-601-8344.