Who pays property taxes at closing when I sell my house?

Published by Michael FrankeDrafted with AI; every statement checked against its source on November 9, 2026

Property taxes at closing are usually split between the seller and buyer based on who owned the house during the tax period. The seller is commonly charged for the time before the sale, and the buyer is commonly charged for the time after the sale. The exact number depends on the closing date, the tax due date, the contract, and local custom. Delinquent taxes or a property tax lien may be paid separately from seller proceeds to clear title.

Key facts

Property taxes are generally split so each side pays for the part of the tax year they owned the home.
For federal income tax purposes, the IRS treats the seller as paying up to but not including the sale date.
On a Closing Disclosure, tax amounts can appear under Prepaids, Initial Escrow Payment at Closing, Adjustments for Items Unpaid by Seller, or seller obligations.
Delinquent taxes are old unpaid seller taxes and can be separate from current year prorations.
Local custom and contract wording matter, and state or county due dates differ.

Selling in Indiana, Ohio, Wisconsin, Tennessee or Georgia? Get a written cash offer in 24 hours, no obligation.

Get my cash offer

The usual split at closing

Property taxes are commonly prorated by the closing date. The basic idea is simple: the seller is charged for the part of the tax year before the sale, and the buyer is charged for the part after the sale.

IRS Publication 530 says real estate taxes are generally divided so the buyer and seller each pay taxes for the part of the property tax year they owned the home. For federal income tax purposes, the seller is treated as paying taxes up to but not including the date of sale, and the buyer is treated as paying taxes beginning with the date of sale.

That federal tax treatment does not mean every county uses the same closing math. Indiana's Court of Appeals has said tax payment terms are usually negotiated in real estate sale contracts and local practice varies.

Check the tax period being prorated.
Check the closing date used.
Check whether the contract uses the day before closing, a certain tax installment, or another method.
Check whether the number is an estimate because the current bill is not available.

Where the numbers appear on the statement

The property tax line is usually on the settlement statement you get at closing. The IRS says this information is generally included there, and each side is considered to have paid its own share even if one side actually pays the whole bill.

On a buyer loan covered by CFPB Closing Disclosure rules, property taxes can show in several places. The form may itemize property tax under "Prepaids," may show tax escrow money under "Initial Escrow Payment at Closing," and may show seller tax credits under "Adjustments for Items Unpaid by Seller."

The CFPB rule also names prorated unpaid tax lines labeled "City/Town Taxes" and "County Taxes." On the seller side, taxes that must be paid to clear title can appear as seller obligations. Taxes are only one part of how much it costs to sell a house.

Look for county taxes or city and town taxes.
Look for prepaid taxes if the buyer is paying taxes in advance.
Look for initial escrow money if the buyer's lender is collecting tax escrow at closing.
Look for a separate payoff or seller obligation if old tax liens must be cleared.

Delinquent taxes are different

Delinquent taxes are not a normal current year proration. The IRS defines delinquent taxes as unpaid taxes imposed on the seller for an earlier tax year.

If a buyer agrees to pay those delinquent taxes, the IRS says the buyer cannot deduct them and treats them as part of the home's cost. At closing, a real estate property tax lien may need to be paid from the seller's proceeds to clear title under the CFPB Closing Disclosure rule.

This is why a closing statement can show both a current year proration and a separate payoff for old taxes. If the sale also involves past due taxes, see can you sell a house with delinquent property taxes and what is a tax lien on a house.

When the current tax bill is not known

Sometimes the bill for the current year is not ready when the sale closes. Indiana is a clear example: its Court of Appeals noted that parties often close while current year's taxes are a lien in an amount not yet known.

In that type of closing, the contract may say how to estimate the amount. The Indiana case described a provision using the current tax rate and assessed value as of closing, and explained that when the current or following year's rate and value are unknown, the parties use the last known rate and value as if they will be the same.

This is an estimate method, not a nationwide formula.

State and county examples

Property tax billing is local enough that two closing statements can look different. These examples show why tax due dates, tax years, and local custom all matter.

Place	Tax timing point	Proration point for sellers
Indiana	Real estate taxes are paid in arrears, and the parties may prorate to closing or use stated May or November installments.	Tax allocation is usually negotiated, and local practice varies.
Tennessee, with Putnam County example	The assessment date is January 1. Current year's taxes become due and payable on the first Monday in October.	Putnam County says the January 1 listed property owner stays on the tax record for the tax year, and taxes are typically prorated at closing.

Escrow accounts and mortgage payoffs

If your mortgage payment includes tax escrow, the escrow account is separate from the buyer and seller tax proration. The proration on the closing statement divides the tax burden between buyer and seller. The escrow account is money held by the mortgage servicer for taxes and other charges.

CFPB servicing rules say that if a mortgage requires escrow for taxes, the servicer must make payments from the escrow account on or before the deadline to avoid a penalty. When the mortgage loan is paid in full, the servicer must return remaining escrow money within 20 days, not counting legal public holidays, Saturdays or Sundays.

Review the mortgage payoff and escrow section separately from the tax proration section. For the mortgage side of the closing statement, see can you sell a house with a mortgage.

How to read the proration without guessing

Do not force one dollar formula onto every closing statement. A tax proration depends on the tax period, the due date, the closing date, the contract wording and local custom.

Start with the property tax period shown on the statement. Then match it to the county bill or state calendar. Finally, compare the proration line with your contract.

County tax offices can answer billing questions, but some offices do not decide the buyer and seller split. Putnam County says its Trustee's Office is not responsible for prorating taxes between buyers and sellers.

Current tax proration: a split for the open tax period.
Delinquent tax payoff: old unpaid taxes or a tax lien.
Escrow balance: money held by your mortgage servicer for taxes and other escrow items.

Frequently asked questions

Is the seller charged for the day of closing?

For federal income tax purposes, the IRS treats the seller as paying property taxes up to but not including the date of sale. The buyer is treated as paying beginning with the date of sale. Local closing practice or the contract can still affect how the statement is prepared.

Why does my closing statement give the buyer a credit for taxes?

If taxes for the seller's ownership period have not been paid yet, the buyer may receive a credit so the buyer is not left paying the seller's share later. The CFPB Closing Disclosure rule describes prorated unpaid taxes due from the seller to reimburse the buyer.

What if the property tax bill is due right after closing?

The contract and local custom matter. Some closings may use a proration credit.

Who pays delinquent property taxes at closing?

Delinquent taxes are old unpaid taxes imposed on the seller for an earlier tax year. A property tax lien may need to be paid as a seller obligation to clear title. If a buyer agrees to pay delinquent seller taxes, the IRS says the buyer treats them as part of the cost of the home.

What happens to my mortgage escrow after I sell?

If your loan requires tax escrow, the servicer must make escrow payments on or before the deadline to avoid a penalty. After the mortgage loan is paid in full, the servicer must return remaining escrow money within 20 days, not counting legal public holidays, Saturdays or Sundays.

Can the buyer and seller choose a different tax proration?

In some places, yes. Indiana's Court of Appeals says tax responsibility in real estate sale contracts is usually a matter for negotiation and local practice varies.

Sources

Checked against each source on November 9, 2026. This page is general information, not legal or tax advice.

IRS Publication 530 (Internal Revenue Service)
CFPB § 1026.38 Closing Disclosure (Consumer Financial Protection Bureau)
CFPB § 1024.34 Escrow Account Balances (Consumer Financial Protection Bureau)
Van Prooyen Builders v. Lambert (Court of Appeals of Indiana / Indiana Courts)
Assessment Schedule (Tennessee Comptroller of the Treasury)
Trustee (Putnam County, Tennessee)