To prorate means to divide something so that each person pays her fair share. The real estate term for dividing expenses that are paid after they are incurred or are prepaid is called prorations.
This means that they are paid now for the previous year. The practical effect of this is that buyers will in many cases get a tax bill for the time when he does not have a house and therefore not responsible for taxes. If you want to get more information about the property taxes and real estate taxes then you can go for property tax consulting.
Difficult parts arise because real estate tax always seems to rise. This is usually handled as part of negotiations. The buyer will request a number based on the tax bill last year the seller plus a small percentage, usually 5 or 10% extra, and some agreements will be achieved.
Increased extraordinary real estate tax due to reassessment, rising interest rates or both can complicate problems. With the increase in real estate prices in the past, many tax agencies became eager to capture at least part of that profit. So it is a buyer beware and make sure you check with the local tax authority.
Prorations can also be used to adjust for any expenses that have been paid by the seller ahead of time, such as prepaid mortgage interest, prepaid casualty insurance, or such items as rent or utility bills. You can visit the Nettles & Co Property Tax Consulting service to get the right advice regarding property tax.
Real property tax is usually determined by an assessor who visits the property yearly and evaluates its worth. The assessed value of a property is computed by multiplying the local assessment rate to the fair market value of a property.
This assessed value is then multiplied to a tax percentage which now becomes the final tax for your property. Rates vary with different states. Some states have a tax rate of 2% while others can go as high as 4%.