Free Property Tax Proration Calculator (Excel Spreadsheet)

0:00 hello and welcome back all my real 0:02 estate enthusiasts in today's video 0:05 we'll dive into the concept of pration a 0:08 vital skill for all aspiring agents 0:11 preparing for the real estate state exam 0:13 my name is Maggie Deo and I am a 0:16 licensed real estate instructor and I 0:18 bring you tips and tricks that will help 0:19 you pass the math portion of your real 0:22 estate state exam I'm also the proud 0:24 owner of Maggie's real estate Academy 0:27 where you can attend my courses and get 0:29 your Florida real estate license 0:31 although I'm in Florida the math on this 0:34 video will help you no matter what state 0:36 you're in since math is a universal 0:38 language after all okay let's get back 0:41 to prorations whether it's annual taxes 0:43 monthly rent or even HOA payments 0:46 understanding pration is crucial for 0:48 Success on your exam we'll explore 0:51 pration methods for both 365 day and 0:55 360-day calendars so let's Jump Right In 1:08 [Applause] What is Proration 1:11 pration is an important part of buying 1:13 or selling a house it's when the costs 1:16 like property taxes HOA fees utility 1:20 expenses and or rent payments are 1:22 divided fairly between the buyer and the 1:25 seller based on how long each own the 1:28 property this helps make sure that that 1:30 everyone pays their fair share and 1:32 avoids any problems pration is really 1:35 important because it keeps things fair 1:37 and helps prevent arguments or confusion 1:40 about who has to pay what it makes sure 1:43 that everyone involved in the sale pays 1:46 the right amount of money which helps 1:49 make the whole process go smoothly for 1:52 pration problems there are three easy 1:55 steps to follow and five rules to 1:58 Counting dates let's start with the five 2:01 rules to Counting dates number one if 2:04 the question does not State how many 2:06 days to use you are to use the 365 day 2:10 calendar number two if it's for a 365 2:13 day calendar and you're prating a 2:16 monthly fee like a rent or an HOA 2:18 payment you will divide by the number of 2:21 days in the month given for closing so 2:24 if the closing is scheduled for sometime 2:26 in May you'll use 31 days since May has 2:29 31 days and if the closing is in 2:32 February you guessed it you'll use 28 2:35 days and so on and so forth number three 2:39 if it's a 360-day calendar you are to 2:42 use 30 days for each month and yes even 2:45 February 2 number four if closing day 2:49 belongs to the seller you count the day 2:51 of closing in the total days in step two 2:54 which we'll discuss next number five if 2:57 the day of closing belongs to the buyer 2:59 you you do not count the day of closing 3:02 which we'll also discuss next now that 3:04 we've gotten the rules of the game out 3:06 of the way let's go over the three easy 3:09 steps to solving probation questions 3:13 step one is to find the daily rate 3:16 basically how much will it cost per day 3:19 simply divide the total amount of the 3:22 yearly tax by either 360 days or 365 3:27 days to get your daily amount step two 3:30 is to find out how many days the seller 3:32 owns the property for that year or month 3:36 remember if the closing day belongs to 3:38 the seller you will count the closing 3:41 day as part of your total days if the 3:43 closing day belongs to the buyer you do 3:47 not count the closing day in your total 3:49 days also as we discussed earlier if it 3:53 says to use 360 calendar days each month 3:57 will have a total of 30 days days and if 4:00 it says to use 365 days you'll use the 4:03 number of days for each month don't 4:05 worry I'll show you a little hack on how 4:08 to know the amount of days each month 4:10 has a little later on in the video and 4:13 finally step three is to just multiply 4:17 step one by step two and there you have 4:20 it super easy okay now here's the hack I 4:23 promised you on how to know the total 4:25 days each month has to find the number 4:28 of days each month has you're going to 4:30 use the knuckle method where each 4:33 knuckle counts for 31 days and the 4:36 indentation between the knuckles is 28 4:39 days or 30 days so it'll look something 4:43 like this January has 31 days February 4:48 has 28 days March has 31 days April has 4:53 30 days May has 31 days June has 30 days 5:00 July has 31 days then you start all over 5:04 August has 31 days September has 30 days 5:10 October has 31 days November has 30 days 5:15 and December has 31 days all right now 5:18 that we have all that information on how 5:20 to solve these types of problems let's 5:23 Jump Right In and go over a few 5:25 questions so you could get some practice 5:28 and perfect your pration calculation 5:33 [Music] 5:36 skills first up let's work out some Examples 5:39 problems using the 365 day probation 5:41 method for annual 5:46 fees number one Alex sold his property 5:50 on June 15th with annual property taxes 5:53 of 5:55 $4,800 what will be the seller's portion 5:58 of the property taxes is if the closing 6:00 date belongs to the seller consider a 6:04 365 day calendar in this property we see 6:08 that it is a total amount of taxes for 6:11 the year of 6:12 $4,800 Step One is to find the daily 6:15 rate so it says to use 365 day calendar 6:20 so now I'm going to divide 6:25 4,800 by 6:27 365 days that's going to equal 6:31 $13 and you have to round to four 6:35 decimal places so since this says 1 6:40 1568 I'm going to round it up to 6:45 $13 and then 6:49 157 step two is now to find the total 6:53 amount of days the seller owns the 6:55 property since the closing is scheduled 6:58 for June 15 7:00 and it belongs to the 7:03 seller I'm going to start counting from 7:07 January so January February March April 7:13 then May and 7:16 June January has 31 days February has 28 7:21 March has 31 April has 30 May has 31 and 7:27 then June since it belongs to the seller 7:29 we'll have 15 days now we're going to 7:33 add up all of those days and we get a 7:37 total of 166 7:40 days so now all we have to do is 7:45 multiply step one's total by the total 7:49 amount of days so 7:54 13157 * 7:57 166 equal 8:05 $2,183 and then it a 01 So my answer is 8:12 B number two Tom sold his property on 8:15 August 1st with annual property taxes of 8:20 $3,600 the closing date belongs to the 8:22 buyer using a 8:24 365-day calendar what will be the sell's 8:28 responsibility of the property taxes in 8:31 this example the property taxes for the 8:33 year are 8:35 $3,600 we are also to use 8:38 365-day calendar we have a closing date 8:42 set for August 1st and it belongs to the 8:48 buyer so Step One is I'm going to find 8:52 the total daily rate I do that by 8:55 dividing $33,600 8:59 by 9:01 365 days that's going to give me 9:07 9863 9:09 01 so we can safely say it just is 9:17 9863 now we find how many days the 9:20 seller owns the property so we have 9:23 January February March April May June J 9:30 July and August since the closing is on 9:33 August 1st and it belongs to the buyer 9:35 August gets zero days so now we just 9:39 fill in the rest of the days January has 9:42 31 February has 28 March has 31 April 9:48 has 30 May has 31 June has 30 July has 9:54 31 we add up all these days and that 9:58 equals 200 112 total 10:02 days now all we have to do is multiply 10:05 this amount by this amount so when you 10:09 multiply 10:11 9.86 3 by 212 days you get a total of 10:19 $2,090 10:21 956 so since this number is five or 10:24 greater we're going to raise this one 10:27 leaving it a total of 10:33 $2,996 as my final answer so the answer 10:37 to number 10:38 two is 10:41 C now let's work out some problems using Problems 10:44 the 360-day pration method for annual 10:51 payments number three Linda sold her 10:55 property on May 1st with annual property 10:58 taxes of 11:00 $6,000 what will be the seller's portion 11:03 of the property taxes if the closing 11:05 date belongs to the seller consider a 11:09 360-day calendar in this example I see 11:12 the closing date is set for May 1st we 11:15 have property taxes for the year of 11:18 $6,000 we're to use a 360-day calendar 11:23 and the closing date belongs to the 11:26 seller so step one is to to find the 11:30 price per day so I will take 11:35 $6,000 and divide it by 11:38 360 days in the 11:40 calendar that 11:42 equals 11:44 16.6 6 6 6 and then 7 remember to use 11:50 four decimal places so I rounded to five 11:53 to then get 11:56 16. 11:58 6666 12:01 7even now I have to find how many days 12:03 the seller own the property for that 12:05 year so we start January February March 12:12 April and May since it's telling me to 12:15 use a 360-day calendar I'm going to use 12:18 30 days for each month except for May so 12:22 January has 30 February has 30 March has 12:28 30 April has 30 and may has one because 12:33 the seller owns the day of closing so 12:37 now we have to add these up and that 12:40 equals 12:41 121 12:44 days now we just multiply step one by 12:47 step two to get our final answer so 12:52 16.6 12:54 667 * 12:57 121 equal 13:01 $216 and then 13:03 670 so it ends up at 13:10 $2,667 that the seller needs to pay at 13:14 closing so the answer is 13:18 D number four Ryan sold his property on 13:22 April 15th with annual property taxes of 13:27 $5,400 what will be the seller portion 13:29 of the property taxes if the closing 13:32 date is pro-rated and it belongs to the 13:35 buyer consider a 13:37 360-day calendar in this example we're 13:41 given property taxes of 13:44 $5,400 and we have a 360-day calendar 13:49 closing day is April 15th and the 13:53 closing day belongs to the buyer step 13:57 one is always to find how much is the 13:59 daily rate so I'm going to divide 14:04 $5,400 by 360 days that equals 14:09 $15 per day now all we have to do is 14:12 find out how many days the seller owns 14:14 the property so if the day of closing is 14:17 April 15th I know that 14:19 January February March and April is all 14:24 we have to count since it's 360-day 14:27 calendar each each month is given 30 14:32 days except for April because we're 14:35 closing on April 15th but since it 14:37 belongs to the buyer we're only going to 14:41 take 14 of those days add of all those 14:44 days and we get a total of 14:48 104 14:50 days now we just multiply step one total 14:54 by step two total so 14:58 $115 time 104 days equal 15:05 $1,560 so the answer to this one is 15:11 B in this section we'll work out some 15:14 problems using the 365 day pration 15:17 method for monthly amounts to be 15:22 prated number five the monthly HOA fee 15:27 for a property is 3 $50 if a seller 15:31 closed on November 12th how much will be 15:34 their portion of the HOA fee for that 15:36 month assume a 365 day calendar here the 15:41 monthly HOA is 15:43 $350 we are scheduled to close on 15:45 November 12th and we're given a 365 day 15:51 calendar in this question since we're 15:53 not given who the closing date belongs 15:55 to you are to automatically assume that 15:58 the Clos closing date belongs to the 16:00 seller so the first thing we have to do 16:03 is find out the total daily amount so 16:07 we're going to take the monthly HOA fee 16:09 of 16:11 $350 and we're going to divide it by 16:13 however many days November has since 16:17 November has 30 days we're going to 16:20 divide by 16:21 30 that equals 16:25 11.66 66 and then repeating six so that 16:30 means we're going to use 16:33 11. 16:37 6667 now we find out how many days the 16:39 seller owns the property for the month 16:42 of November here since it does not 16:44 belong to the buyer we're going to 16:46 include 12 days so since it's just in 16:50 November it is a total of 12 16:54 days now step three is to multiply so 17:00 11.66 17:01 67 * 12 = 17:07 $40 17:09 and0 even So my answer to this one is 17:17 a number six Emma sold her condo where 17:21 the tenant pays a monthly rent of 17:25 $1,200 the closing day is on May 20th 17:28 and the buyer is responsible for closing 17:31 day how much will Emma receive as her 17:33 share of the rent for the month of May 17:36 in this example we see that the amount 17:38 of rent to be prated is 17:40 1,200 we see that the closing day is 17:43 scheduled for May 20th and the buyer is 17:47 responsible for day of closing here it 17:50 is not given the calendar days to use so 17:54 we must assume that 365 day calendar is 17:58 the one we're going to use so in a 365 18:01 day calendar since May has 31 days 18:05 that's what I'm going to use for step 18:07 one remember step one is to find the 18:09 daily total so I'm going to divide 18:14 $1,200 by 31 which is the amount of days 18:18 May has so 18:21 $1,200 divided by 31 = 38.7 18:30 967 so we're going to use 18:35 38.7 18:38 97 now we have to find out how many days 18:41 Emma owned the property in the month of 18:44 May since it's May 20th the day of 18:48 closing and the buyer is responsible for 18:51 closing day that means she only owned 18:53 the property 19 18:55 days so now we just multiply step one 1 18:59 total by step two total and we get 19:10 387973 19:11 and 19:13 484 so since this is five or less it 19:17 just stays at 19:21 $735 19:23 48 So my answer to this one is C 19:30 and in this section we'll work out some 19:32 problems using the 360-day pration 19:35 method for a monthly amounts to be 19:41 prated number seven the monthly HOA fee 19:45 for a property is 19:47 $250 if the seller closed on the 19:50 property on February 15th how much will 19:53 be their portion of the HOA fee for that 19:56 month if the seller owns the day of 19:58 closing 19:59 assume a 360 day 20:01 calendar here I see that the monthly HOA 20:05 fee is 20:06 $250 they are set to close on February 20:10 15 and the seller owns the day of 20:15 closing we're also to use 360 days so 20:19 step one is to find the daily rate so 20:22 I'm going to take the HOA fee of 20:25 $250 and divide it by 30 because we're 20:29 using the 360 day calendar it does not 20:33 matter that February only has 28 days 20:37 remember when using a 360-day calendar 20:41 every month has 30 days now let's divide 20:45 250 by 30 that equals 20:51 8.33 33 repeating okay so we could just 20:55 leave it as 8.33 333 20:59 now we're going to find out how many 21:00 days the seller owned the property in 21:03 February so for February if the closing 21:08 date is set for February 15th and the 21:11 seller owns the day of closing that's 21:15 going to equal a total of 15 days in 21:18 February so now all we do is multiply 21:25 83333 by 15 and we get a total of 21:33 12499 and nine it keeps repeating nine 21:36 well so round it up and that's going to 21:40 equal 21:42 $125 21:44 even so the answer to this one is 21:51 a number eight the monthly HOA fee for a 21:56 property is 21:57 $300 if a buyer closed on April 20th and 22:00 is responsible for the day of closing 22:03 how much will the seller's portion of 22:04 the HOA fee amount to for that month 22:08 assume a 360-day 22:11 calendar for this question the HOA fee 22:15 is 22:16 $300 they're closing on April 22:19 20th buyer is responsible for closing 22:23 date and we're using 360 days so we're 22:28 going to take $300 of the HOA fee and 22:34 divide it by 30 even though April has 30 22:37 days in it already since given the 22:40 360-day calendar we remember to use 30 22:44 days for every month now when we divide 22:48 30 into 300 we get 22:53 $10 that is going to cost $10 per day 22:57 now we're going to have to find out how 22:58 many days in April the seller owned the 23:01 property so if the buyer is responsible 23:05 for day of closing and they're closing 23:07 on April 20th that means it is 19 days 23:13 only now to find the answer is just 10 * 23:18 19 and that's going to equal 23:23 $90 So my answer is B 23:30 and there you have it now you should be 23:32 able to solve these pration questions 23:35 like a pro in this video we explored the 23:38 concept of pration in real estate 23:41 transactions covering annual taxes 23:44 monthly fees and the use of both 360 and 23:49 365 day calendars understanding pration 23:52 is a very important concept for aspiring 23:55 agents preparing for the real estate 23:57 state exam by mastering pration you'll 24:00 be equipped to accurately calculate and 24:03 distribute expenses between buyers and 24:07 sellers ensuring fairness and 24:09 transparency throughout the transaction 24:13 understanding the concept of pration 24:15 will help you guide your clients in 24:18 understanding the real estate closing 24:20 procedures if you found this video 24:22 helpful in mastering pration don't 24:25 forget to like subscribe and share it 24:28 with with any fellow aspiring agents you 24:30 may know click on the notification Bell 24:32 to stay updated with our latest real 24:34 estate math content remember a solid 24:38 understanding of probation is key to 24:40 acing your real estate state exam stay 24:43 tuned for more valuable insights and 24:45 math tips from me Maggie joso right here 24:49 on just call Maggie if you're looking to 24:51 elevate your math understanding and 24:54 boost your chances of acing the real 24:56 estate exam I want to share something 24:58 special with you introducing math skills 25:01 for Real Estate success your ultimate 25:03 companion to mastering real estate math 25:06 packed with Comprehensive exercises 25:08 step-by-step explanations and invaluable 25:11 tips this workbook is designed to help 25:14 you conquer any math challenge that 25:17 comes your way head over to just call 25:19 maggie.com shop and grab your copy today 25:23 trust me this workbook will be your 25:25 secret weapon in becoming a math wi in 25:27 the world of Real Estate 25:30 [Music]