49. A real estate licensee is prorating taxes. Last year's taxes of $1250 were paid in arrears on February 1 for the previous calendar year. Closing is set for June 15. Based on the nearest cent, what amount of prorated taxes should the seller pay at closing? Seller pays for the day of closing. Use a 360-day year and a 30-day month. Round to the nearest cent.
Answer: C
The seller should pay $577.50 in prorated taxes at closing.
To determine the prorated taxes the seller owes at closing, we calculate the daily tax rate based on last year's total taxes and then apply it to the number of days the seller is responsible for before closing.
A) $472.50
This option is incorrect because it underestimates the prorated taxes due. The calculation does not account for the total number of days the seller is responsible for the property before the closing date.
B) $525.00
This option is incorrect as well. While it is closer than option A, it still does not accurately reflect the seller's prorated liability based on the correct calculation of days and tax rate.
C) $577.50
This is the correct answer. The total annual taxes of $1250 divided by 360 days gives a daily tax rate of approximately $3.47. From January 1 to June 15, there are 165 days, so the seller is responsible for 165 days of taxes, resulting in a total of $577.50.
D) $682.50
This option is incorrect because it overestimates the amount due. It assumes the seller is responsible for more days than actually accounted for, leading to an inflated prorated tax figure.
Conclusion
The correct prorated tax amount of $577.50 accurately reflects the seller's responsibility for the property taxes from the beginning of the year until the closing date. All other options fail to represent the correct calculation based on the provided tax information and the specific days the seller is responsible for the taxes.