Humber/Ontario Real Estate Course 4 Exam Practice

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What property tax adjustment needs to be made for a home purchased earlier in the year if property taxes paid amount to $2,450 and the closing date is September 14th?

Buyer; $731.64
Seller; $724.93
Seller; $731.64
Buyer; $1,718.36
Seller; $1,718.36
Buyer; $724.93

The correct answer is: Seller; $731.64

In this scenario, since the closing date is September 14th, the seller has owned the property for 257 days in the year. To calculate the property tax adjustment, you would need to determine the daily property tax rate. Given the total property taxes paid amounting to $2,450, dividing this by the total number of days in the year (365) would give you the daily property tax rate. $2,450 ÷ 365 = $6.71 (approx.) Multiplying the daily property tax rate by the number of days the seller owned the property (257 days) gives: $6.71 * 257 = $1,725.47 (approx.) Since the seller has already paid $2,450 in property taxes, they would be entitled to a refund for the period after the closing date. $2,450 - $1,725.47 = $724.53 The correct answer is therefore to credit the seller $724.53, which aligns with option C.