Tax Proration Explanation

What Is Tax Proration?

Tax proration is a credit the seller gives the buyer at closing toward the property tax bill that comes due after the sale. Property taxes are paid after the fact, so the buyer will receive a bill that covers time the seller owned the home. Proration makes sure each party pays for their own share.

How much the seller credits depends on the proration method written into the purchase contract. Two methods are common in our market: the Due and Payable Method and the Lien Method.

Due and Payable Method

Typically used in Lucas County

The seller credits the buyer only for the portion of the upcoming bill that the buyer will be responsible for paying. The calculation runs from the most recent due and payable date (June 20 or December 20) up to the closing date. Because that window never exceeds roughly 180 days, this method generally favors the seller.

Example: For a closing on February 28, 2027, taxes are prorated back to December 20, 2026. The seller credits the buyer for about 70 days of taxes.

Lien Method

Typically used in most other Ohio counties

The seller credits the buyer for the next tax bill due, plus a prorated share of the bill that follows. The calculation runs back to the start of the tax period, either January 1 of the current year or July 1 of the previous year. That window can reach up to 365 days, so this method generally favors the buyer.

Example: For a closing on February 28, 2027, taxes are prorated back to July 1, 2026. The seller credits the buyer for about 242 days of taxes.

Choosing a Method

The settlement statement follows the language in the purchase contract, not the property’s location. Agree on the method when the offer is written and accepted, because it can change what each side pays at closing. Your agent and our closing team can help you compare the two for your transaction.