What Is Prorations?
Prorations are the day-by-day splitting of costs — like property taxes, HOA dues, or rent — between a buyer and seller at closing, based on how many days each party actually owned the property during the billing period.
Formula
Seller's Share = (Days Owned ÷ Total Days in Period) × Total Cost
Example
If annual property taxes are $3,650 and the seller owned the home for the first 200 days of the tax year, the seller's prorated share is ($3,650 ÷ 365) × 200 = $2,000.