In the Henry–Susan transaction, what is the amount of the city and county taxes?

• A. 750.00
• B. 760.00
• C. 780.00
• D. 800.00

Answer: (B)

Prorating city and county taxes at closing is what this item tests. In Florida closings, the annual tax bill is divided between the seller and the buyer based on how many days each party owned the property during the tax year. The per-day tax amount is found by dividing the annual city and county tax by 365 (or 366 in a leap year), and then you multiply by the number of days the seller owned the home up to (and including, if your practice uses that convention) the closing date. The result is the prorated amount that must be settled at closing.

In the Henry–Susan transaction, the figures given lead to a prorated city and county tax amount of 760.00, which is the portion allocated at closing to settle the tax obligation between the parties. The other options would not reflect the correct prorated portion (they would correspond to the full-year amount or a miscalculation of the days and rate).