Property Taxes Prorated at Closing: The Math

In Houston, the tax proration on a September closing usually moves money toward the buyer, often four figures of it. In Los Angeles, the same closing date usually moves it the other way. Nothing about the two houses explains that, and neither does the price. The difference is which month each county mails its bill, and whether the bill in question has been printed yet at all.

Page 3 of the Closing Disclosure will not tell you which of those you are looking at. It gives you a label, a date range, and an amount. Everything that produced the amount, an annual bill or a guess at one, a divisor of 365 or 360, a decision about who owns the closing day, happened inside the settlement agent's software and appears nowhere on the form. Rebuilding it takes ten minutes and one number you can look up yourself.

This is arithmetic, not tax advice, and it covers only the adjustment blocks. Who receives each fee, and which lines are somebody's revenue rather than yours, is a separate reading: closing costs line by line.

The county calendar decides which way the money moves

A jurisdiction can bill for a year after it has largely happened, or ahead of it. That single choice sets the direction of every tax proration in the county, and it is not a local custom you can talk your way around.

Texas is the plainest arrears case. The Comptroller's page on paying property taxes says taxing units "start mailing tax bills in October and payment is due upon receipt," that "in most cases, you must pay your property taxes by Jan. 31," and that taxes unpaid on February 1 are delinquent (Texas Comptroller, Paying Your Taxes, read 10 September 2026). Close in September and the 2026 bill does not exist. It will arrive in October addressed to you.

Illinois runs on a two-year cycle by design. The Department of Revenue's guide describes property being valued as of January 1 of the first year, with bills "calculated and mailed and payments distributed to local taxing districts" during the second. Cook County and some others go further and bill the first installment before anyone knows the year's rate: that installment is 55 percent of last year's tax bill, mailed by January 31, due March 1 in Cook County, with the second installment typically mailed by June 30 and due August 1 (PTAX-1004, The Illinois Property Tax System, revision R-01/26, read 10 September 2026). A spring closing there prorates off a number the statute itself treats as a placeholder.

Florida bills for the calendar year, due November 1 and delinquent on April 1 following the year of assessment, or 60 days after the original tax notice went out, whichever falls later (Fla. Stat. 197.333), with early-payment discounts of 4 percent in November, 3 in December, 2 in January and 1 in February (197.162, both read 10 September 2026). That discount raises a question the form has no room for. A seller who paid in November paid less than the face amount of the bill. Is your reimbursement computed on what was assessed, or on what was actually paid? The two answers differ by up to 4 percent of a year, and the line looks identical either way.

California splits the difference in a way that confuses nearly everyone. The Los Angeles County Treasurer and Tax Collector describes a fiscal year running July 1 through June 30, with bills mailed in October and no later than November 1, carrying "two payment stubs" — the first due November 1 and delinquent after December 10, the second due February 1 and delinquent after April 10 (LA County Secured Property Taxes FAQ, read 10 September 2026). Note the wording. Two stubs on one annual bill. The county does not say the second stub buys January through June. That allocation is a settlement convention, and further down this page it is worth $18.28.

Two blocks on page 3, and a mirror on the seller's copy

The federal rule that builds the form is 12 CFR 1026.38, and its Summaries of Transactions requirements are more specific than the page looks. Section K, the total labeled "Due from Borrower at Closing," must carry the heading "Adjustments for Items Paid by Seller in Advance," followed by "the prorated amount of any prepaid taxes due from the consumer to reimburse the seller at the real estate closing, and the time period corresponding to that amount" on two lines labeled City/Town Taxes and County Taxes, and the identical sentence with "prepaid assessments" in place of taxes on a third labeled Assessments (1026.38(j)(1)(vi) through (ix)). Section L, "Paid Already by or on Behalf of Borrower at Closing," carries the mirror heading "Adjustments for Items Unpaid by Seller" with the same three labels (1026.38(j)(2)(vii) through (x)). The seller's own summary repeats both blocks under M and N. Every proration prints twice, once as a debit and once as a credit, and the two copies have to agree.

The CFPB's explainer puts the distinction in one sentence each. Items paid in advance are "costs that have been prepaid by the seller that you are now reimbursing the seller for." Items unpaid are "prior taxes and other fees owed by the seller that you will pay in the future. The seller is reimbursing you now to cover these expenses" (Closing Disclosure explainer, read 10 September 2026).

The phrase worth memorizing is "the time period corresponding to that amount." The regulation forces the date range onto the line. That range is the only part of the calculation the form guarantees you, and it is enough to reverse-engineer the rest.

Two things sitting nearby are not prorations at all. The block on page 2 headed "Initial escrow payment at closing" (1026.38(g)(3)) is your own money going into an account your servicer will spend on your behalf later; nobody is reimbursing anybody. An HOA transfer fee or capital contribution is a one-time charge that lands in Section H, even though it arrives in the same envelope as the dues figures. Prorations also sit in the group of costs that may change without limit between the Loan Estimate and the Closing Disclosure, so a tax line that grew by $600 since June is not a tolerance question, however much it feels like one. The three tolerance groups are set out in which fees can legally change.

A Harris County closing where the bill has not been printed

The numbers below are a worked example, not a rate table. Closing on Friday, 18 September 2026. The 2026 bill will not be mailed until October, so the settlement agent uses the 2025 bill, $8,412.60, as the estimate. The seller owned the house from January 1 through the closing date and owes that share.

Count the days first, because the divisor argument is downstream of it. January 1 through September 18 inclusive is 261 days.

• Actual days. $8,412.60 divided by 365 is $23.048219 a day. Times 261 is $6,015.59.
• Thirty-day months. $8,412.60 divided by 360 is $23.368333 a day. Eight full months of 30, plus the 18 days of September the seller holds under the same closing-day rule, is 258. Times 258 is $6,029.03.

Thirteen dollars and forty-four cents apart, on the same bill and the same closing date. Neither is an error, and neither method is named on the Closing Disclosure, in Regulation Z, or in the two contracts quoted further down. The line simply reads County Taxes 1/1/26 to 9/18/26 and an amount, in Section L, with its twin on the seller's Section N.

So the check runs backwards. Take the printed amount, divide by the days in the printed range, and compare the result against the annual figure over 365 and over 360. Whichever it matches is the method that ran. If it matches neither, the annual figure is not what you assumed, and that is the more interesting finding.

One habit to break early: the credit is not a discount. Six thousand dollars appearing on your side of the ledger reads like a win and is not. It is the seller's share of a bill addressed to you that arrives in October. If your loan is escrowed the servicer spends it. If it is not, it sits in a checking account for four months looking exactly like savings.

A Los Angeles closing where the seller already paid through June

Same exercise, opposite direction. Closing Thursday, 12 March 2026, fiscal year 2025-26 annual bill $7,320.00, again an example, both stubs paid. The seller has bought coverage through June 30 and is leaving in March, so the buyer reimburses the tail.

The buyer's period, taking the closing day as the seller's, is 13 March through 30 June: 110 days.

• Annual bill over the fiscal year. That fiscal year is 365 days. $7,320.00 divided by 365 is $20.054795 a day. Times 110 is $2,206.03.
• Second stub over a half year. Treat the $3,660.00 stub as buying 1 January through 30 June, which is 181 days. $3,660.00 divided by 181 is $20.220994 a day. Times 110 is $2,224.31.

$18.28 apart, and the second method rests on an allocation the county's own page never makes. Both get used. Ask which one produced your line and the answer usually arrives within the hour, because it is a software setting rather than an opinion.

Now change one fact. Suppose the seller paid the November stub and the February stub was still unpaid on 12 March. The same house in the same county now produces a credit running the other way, in Section L rather than Section K, because a proration follows what was actually paid rather than what the state generally does. Which is why "is my state prepaid or in arrears" is the wrong opening question. The right one is narrower: what has this seller paid, and through what date.

Through the Closing Date and to the Closing Date are one day apart

Paragraph 13 of the TREC One to Four Family Residential Contract (Resale) reads: "Taxes for the current year, interest, rents, and regular periodic maintenance fees, assessments, and dues (including prepaid items) will be prorated through the Closing Date" (TREC form 20-19, page footer dated 05-04-2026, read 10 September 2026).

Section 16.1 of Colorado's Contract to Buy and Sell Real Estate (Residential) reads: "The following will be prorated to the Closing Date, except as otherwise provided" (CBS1, for use on or after January 1, 2026, read 10 September 2026).

Through, and to. One preposition, one day, $23.05 in the Texas example and $20.05 in the California one, and the same day gets counted again on the HOA line and on prepaid interest. Where your form does not settle it, the settlement agent's default does. You do not actually have to ask anyone which convention they used: the date range printed on the line already says it. If your closing is the 18th and the range ends 9/18/26, the seller bought that day.

Estimating a bill nobody has issued

The Colorado form is unusually honest about the guesswork, and worth reading even if you are buying elsewhere. Section 16.1.1 makes the parties pick the basis by checkbox — taxes for the calendar year immediately preceding closing, or the most recent mill levy with the most recent assessed or actual valuation per the county assessor — and then runs whichever they picked through a second clause: "adjusted by any applicable qualifying seniors property tax exemption, qualifying disabled veteran exemption or Other," with a blank line after Other. Two decisions, printed as one sentence.

TREC gets at the same risk in one sentence: "The tax proration may be calculated taking into consideration any change in exemptions that will affect the current year's taxes."

That clause is the one that quietly costs money. If the seller held a homestead or senior exemption, last year's bill is not a forecast of this year's. It is a forecast of this year's bill for a person who no longer owns the house. Prorate off it and the credit you receive is short by the value of an exemption that dies at closing, and you find that out in October, alone. The question that surfaces it is narrow enough to answer in a sentence: was the estimate adjusted for exemptions that will not survive the sale? A vague answer is itself information. It means the figure on the line is an assumption, and the document that settles assumptions is the contract, not the October bill.

HOA dues: read the estoppel letter, then divide

Association dues are almost always billed in advance, which puts them in Section K, and the source document is not the listing or the seller's memory. Florida writes out the entire form by statute. An estoppel certificate must be issued within 10 business days of a written request and must state the regular periodic assessment and its frequency, the date it is "paid through," the due date and amount of the next installment, an itemized list of everything owed at issuance, and whether a capital contribution, resale or transfer fee is due (Fla. Stat. 720.30851, read 10 September 2026). Fees for it are capped: no more than $250 where nothing is delinquent, an extra $100 for delivery within 3 business days, an extra $150 where a delinquency exists. The certificate is effective for 30 days if hand delivered or emailed and 35 days by regular mail, which is exactly why a delayed closing sometimes produces a second one and a second fee.

The "paid through" date and the installment amount are the only two inputs the dues proration needs. The divisor is where it drifts. Take $285 a month paid on the first, a 12 March closing, and a buyer's period of 13 through 31 March, 19 days. Over March's 31 days that is $9.193548 a day and $174.68. Bill the same association quarterly at $855 and prorate over the 90 days of the first quarter and it is $9.50 a day and $180.50. The gap is $5.82 and it does not matter. What matters is that it tells you which convention the software is running, and the same convention is on the tax line where it is worth hundreds.

Colorado's section 16.2 works as a checklist wherever you buy. Regular assessments paid in advance are credited to the seller. Cash reserves held out of assessments for deferred maintenance are not credited to the seller. A special assessment levied before closing goes to buyer or seller by checkbox, but one levied for improvements already installed as of the date the buyer signed is the seller's, whether it was assessed before or after closing, unless Additional Provisions say otherwise. None of that is prorated by day. Special assessments and transfer fees are whole numbers that land on one party, and treating them as prorations is how they end up on the wrong one.

The bill arrives in October and the numbers do not match

Back to Harris County. Suppose the 2026 bill lands at $8,905.14 rather than the $8,412.60 used at closing. The seller's true 261-day share is $8,905.14 divided by 365 times 261, which is $6,367.79. They credited you $6,015.59. The estimate was short by $352.20, and you are the one holding the bill.

Two contracts, two answers. TREC paragraph 13: "If taxes for the current year vary from the amount prorated at closing, the parties shall adjust the prorations when tax statements for the current year are available." Colorado section 16.1.4: "Unless otherwise specified in Additional Provisions, these prorations are final."

Under the first, both parties agreed in advance to true it up. What the sentence does not supply is a deadline, a form, or an address anyone is obliged to keep current, so in practice you are asking a stranger for $352.20 in January, four months after everyone stopped answering the group text. Under the second the $352.20 is simply yours, and the only place it could have been changed was Additional Provisions, before signing. Either way the real decision happened at contract, which is the pattern the whole 45-day map keeps repeating.

If a proration is corrected during closing week, a revised Closing Disclosure comes with it and the usual panic follows. It does not move your date. Only three changes restart the three-business-day wait, and a corrected number in Section K is not among them: what resets the three-day rule.

Rebuild the line before the wire goes out

Open page 3 and, for each adjustment line, get these:

1. The annual figure and where it came from. A real bill, an estimate, or a prior year still carrying an exemption that is about to disappear.
2. The date range printed on the line, and whether it ends the day before closing or the day of.
3. The quotient. Amount divided by days in the range, compared against the annual figure over 365 and over 360.
4. Whether the proration is final under your contract, in writing, before you sign anything.

If the quotient does not land on either divisor, one email is enough, and it works better naming the line exactly as the form does: the label, the date range, the amount. That sentence gets a specific answer. "The taxes look high" gets a reassuring one.

Every regulation, statute and form quoted here was read on 10 September 2026, and each link points at the issuing body's own text rather than somebody's summary of it: the eCFR's current version of Regulation Z, the Florida Senate's 2026 statutes, and the two real estate commissions' own PDFs of their current forms. Check the edition line when you open one; the Colorado form above carries a mandatory use date of 1 January 2026 and the TREC form a footer of 05-04-2026, and both get replaced. The dollar figures are worked examples chosen to make the arithmetic legible. Your county's calendar, your seller's exemptions and your association's billing cycle are the only three inputs that matter, and all three can be had before the day you sign.

More of the same page under Closing Costs Line by Line, and the week it all lands in under Closing Week.