You're reviewing your closing statement and see a line item for property taxes—but wait, you already paid your property taxes for the year. Or did you? And why are there credits and debits? What's actually happening here?

Let's demystify how property taxes work at closing so you're not confused when you sign.

Property Tax Proration Explained

Property taxes are typically paid annually or semi-annually in arrears (meaning you pay for the previous period). At closing, taxes are "prorated"—divided proportionally between buyer and seller based on who owned the home when.

Example:
You close on July 1st. You owned the home January 1 - June 30 (6 months), and the buyer owns it July 1 - December 31 (6 months). You're responsible for your 6 months, buyer for theirs.

If You've Already Paid Taxes

Let's say you paid your full-year property taxes in January. You close July 1st. You've prepaid for July-December even though the buyer will own the home then.

 

At closing, the buyer credits you for the taxes you prepaid that cover their ownership period. You get money back.

If Taxes Aren't Paid Yet

If taxes haven't been paid yet, you'll owe your prorated share at closing. The title company collects it from you and ensures taxes get paid.

It's All About Timing

Liz Marks-Strauss, REALTOR BROKER at FC Tucker Company with over 400 homes sold, helps sellers understand their closing statements line by line. "I had a seller in Carmel panic when they saw a $2,800 tax charge on their closing statement. I explained they were getting a $3,100 credit elsewhere because they'd prepaid. Their net was actually positive—they just didn't understand how prorations worked."

HOA Dues Work the Same Way

If you're in an HOA, dues are also prorated. If you paid quarterly dues in advance, you'll get credited for the days after closing. If you owe, you'll pay your share.

 

Transfer Taxes Are Different

Transfer taxes (the tax on the sale itself) are separate from property taxes. In Indiana, sellers typically pay transfer tax of around $3.50 per $1,000 of sale price.

Why This Matters

Understanding property tax prorations helps you accurately estimate your net proceeds. Liz Marks-Strauss real estate sellers get detailed net sheets showing every line item—including tax credits and debits—so there are no surprises.

As a 12-year veteran real estate agent, she ensures clients understand exactly what they're paying and why.

Review Your Closing Statement Early

Don't wait until you're sitting at the closing table to review your settlement statement. Get it 24-48 hours early, review every line, and ask questions if something doesn't make sense.

 

Liz Marks-Strauss walks clients through closing statements before closing day. "I explain every charge, every credit, and make sure the math is correct. Mistakes happen, and catching them early saves headaches."

The Bottom Line

Property tax prorations are standard and fair—you pay for your time of ownership, buyers pay for theirs. With 54 Google 5-star reviews and deep knowledge of Indianapolis IN real estate 2025, Liz Marks-Strauss ensures her sellers understand every aspect of closing.

Whether you're in Fishers, Noblesville, or Zionsville, knowledge is power at closing.

 

Contact Liz Marks-Strauss at FC Tucker Company | 317-502-3358 | www.HeyMomImHome.com for a FREE 2026 Market Strategy Session