Is there a standard for prorating taxes? 2% default?
I'm closing on the sale of a flip tomorrow and the title company is telling me that my proration of school taxes is based on the 2% discount, even though I didn't pay the full amount OR pay early enough to receive the 2% discount.
Here are the details:
The property is in Woodland Hills School District. Year runs from 7/1/2020 through 6/30/2021. Annual taxes are $2365.04. Because of the timing of this closing and the fact that this was supposed to close in October, I choose to pay an installment (so I paid $788.36 or one third). Obviously, there is no 2% discount on an installment.
Since the school year runs from 7/1 through 6/30 and I'll own the house for five months during that time, I am responsible for about $991.44. Of that amount, I have already paid $788.36, so I should owe an additional $203.08. However, the title company is telling me different. In the end, it's about a $30 difference. It's not the end of the world, but it makes no sense to me.
What the title company is showing on the HUD is a DEBIT of the full year amount (with no discount). So that's a debit of $2365.04. Then, they are only crediting me back as if I paid and received a 2% discount. They told me it's "industry standard."
I've been on the other side of this and was specifically told if the 2% discount was not taken advantage of, then the buyer does not get that benefit...which makes sense to me.
Thoughts?