How are property taxes prorated at closing?
By the purchase contract. Virginia's Code says the seller's liability for real estate taxes is prorated contractually and sets no formula for the buyer and seller split, so the contract names the dividing date. The closing document then credits whichever side paid for days the other owns: the buyer reimburses taxes the seller prepaid, and the seller reimburses taxes still unpaid for the seller's days.
The Code hands the split to the contract, and the closing statement shows the result
There is a gap between what Virginia law says about a year's real estate taxes in a sale and what a closing statement actually prints. The law says very little. The closing statement prints dates, day counts and credits. Everything in between is the contract.
The seller's liability for taxes and levies shall be effectively prorated contractually.
Va. Code 58.1-3340
That sentence has no formula in it, no dividing date and no method for counting days. It leaves the seller's share to be prorated by contract. The same section does two firmer things. It makes real estate taxes a lien on the land "prior to any other lien or encumbrance," and it tells the purchaser at a sale to cause the proceeds to be applied to the taxes assessed on the real estate. Past-due taxes paid off from those proceeds are a separate subject, covered in selling land with a lien or back taxes.
| Question | Where the answer comes from | Where it shows up |
|---|---|---|
| Whether the year's taxes are split, and at what date | The purchase contract | The contract's tax clause |
| That the taxes are paid out of the sale | Va. Code 58.1-3340, the purchaser's duty to apply proceeds to the taxes | The payoff and tax lines at settlement |
| How prepaid and unpaid taxes are itemized on a financed purchase | The federal Closing Disclosure rule, 12 CFR 1026.38 | Separate "City/Town Taxes" and "County Taxes" lines, each with its time period |
| When each installment is due | The locality's own ordinance | The county or city tax bill |
The full document those lines sit in, and how to read it top to bottom, is explained in what a settlement statement is.
A date-of-sale division, and the matching line the IRS draws
Because the Code leaves the method open, the dividing date is whatever the contract names. A date-of-sale division works like this: the seller carries the taxes for the part of the tax year before the sale, and the buyer carries them from the sale onward.
Federal income tax uses a similar line for its own purposes. IRS Publication 530 says real estate taxes are generally divided so that buyer and seller each pay for the part of the property tax year each owned, and it treats the seller as paying the taxes up to but not including the date of sale and the buyer as paying beginning with the date of sale. The publication adds that this applies regardless of the lien dates under local law.
That federal rule is about who is treated as paying for income tax purposes. It does not write the contract, and it does not decide what either party may deduct on a given return; that belongs to a CPA. The term itself is defined under proration.
Whether the current installment is already paid decides who reimburses whom
A date-of-sale split only tells you whose days are whose. The direction of the money depends on a second fact: on the closing date, has the installment that covers those days been paid yet?
The federal Closing Disclosure rule covers both cases. If the seller has already paid taxes for days the buyer will own, the form itemizes the prorated amount of prepaid taxes due from the buyer to reimburse the seller. If taxes for the seller's days are still unpaid, it itemizes the prorated amount due from the seller to reimburse the buyer. Each amount carries its time period, and city or town taxes sit on a different line from county taxes.
The due dates behind that question are local. Virginia lets each governing body set them by ordinance, in a single installment or in two equal installments, so the answer changes at the county line.
| Locality | What the office publishes | Note |
|---|---|---|
| Carroll County | 2026 deadlines: June 24, 2026 for the first half and December 7, 2026 for the second half | These are 2026 dates only; the Treasurer collects and the Board of Supervisors sets rates each year |
| Floyd County | Two equal installments, due on or before June 26 and December 5 of the taxable year | The county says it is not a pro-rated county for its records |
| Wythe County | December 5 listed as the due date for real estate taxes | Confirm installments with the Treasurer |
| Grayson, Pulaski and Montgomery counties, City of Galax | Not read for this page | Ask each Treasurer |
Floyd County says real estate transfers recorded after January 1 of the tax year will not show the new owner on that year's record, and that tax arrangements in those cases are usually handled by the closing attorney. Separately, Virginia lets a treasurer who learns of a transfer after January 1, once a bill has been mailed, invalidate the bill sent to the prior owner and reissue it to the new one. The word in that statute is "may," so whose name is on the bill is not a reliable guide to who owes what under the contract.
When only part of a tract sells, the purchase price ratio replaces the acreage split
Land sales raise a case a house sale rarely does: a buyer takes ten acres off the side of a larger tract that has one tax bill. For applying the sale proceeds to that bill, Va. Code 58.1-3340 does set a ratio, and it is not acreage.
The purchaser causes the proceeds to be applied to the taxes on the entire tract, "prorated in accordance with the relationship that the purchase price bears to the most recent assessed value of the entire tract." The comparison is price against the whole tract's assessment, so a small piece bought at a strong price can carry a larger share of the bill than its acres suggest.
The ratio
The purchase price of the piece is set against the most recent assessed value of the whole tract, and the taxes on the whole tract are prorated by that relationship.
When an appraisal can be required
If the cost per acre of the purchased parcel is less than the assessed value per acre of the whole tract, or, in the reasonable opinion of the commissioner of the revenue or other assessing officer, the price is below the parcel's fair market value, that officer may require an appraisal of the piece by a state-certified or state-licensed appraiser.
Which figure then counts
The proration uses the greater of that appraised value or the purchase price, against the whole tract's assessed value.
The lien on the piece
The purchaser's portion is relieved of the tax lien to the extent the proceeds exceed the purchaser's pro rata share of taxes.
A piece split off land enrolled in a use value program can also raise roll-back taxes, which is a different tax with different rules; who bears it is covered in who pays rollback taxes when land sells.
Each tax line on the closing statement has a different office behind it
When a tax line on the statement is in question, the answer sits with one of these.
| The question | Who answers it |
|---|---|
| Which date and day count the contract uses | The settlement agent or the closing attorney, from the contract |
| Whether this year's installment is paid, and the amount | The Treasurer of the county or city that bills the parcel; in Carroll County, 605-10 Pine Street, Hillsville, (276) 730-3060 |
| The assessed value of the whole tract, for a partial sale | The commissioner of the revenue or other assessing officer |
| Whether roll-back taxes apply | The commissioner of the revenue |
| What either side may deduct on an income tax return | A CPA |
A proration is one line among many closing costs and credits, and it moves money between the two sides rather than to a third party. Who customarily pays the rest of those costs is a separate question. How settlement in Virginia runs from ratified contract to recorded deed is set out step by step in the Land 101 guide.
Selling land and unsure how the county tax lines will read at closing?
Send the county and where the contract stands. Lowell will read the tract's tax record with you, while the proration itself stays with your settlement agent or closing attorney. No cost, no obligation.
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We'll be in touch shortly with an honest read.
Questions this raises
Whose name goes on the tax bill after a mid-year closing?
It can depend on the locality. Virginia lets a treasurer who learns a property transferred after January 1, once that year's bill was mailed, invalidate the bill sent to the prior owner and reissue it to the new owner. Floyd County says transfers recorded after January 1 will not show the new owner on that year's record. Either way, as between buyer and seller, the contract decides who bears the taxes.
Does the IRS follow the contract's tax split?
The IRS has its own line. Publication 530 treats the seller as paying real estate taxes up to but not including the date of sale and the buyer as paying from the date of sale, regardless of lien dates under local law. How that meets the figures on a particular closing statement, and what either party may deduct, is a question for a CPA.
Where this page's facts come from
Every rule, office and figure above traces to one of these. Rules change; check the office before you act on one.
- Va. Code 58.1-3340, tax lien on real estate, application of sale proceeds and contractual proration Virginia General Assembly
- Va. Code 58.1-3916, local due dates, installments and reissuing a bill after a transfer Virginia General Assembly
- Publication 530, dividing real estate taxes between buyer and seller Internal Revenue Service
- 12 CFR 1026.38, Closing Disclosure content, prorated tax adjustments Consumer Financial Protection Bureau (eCFR)
- Treasurer: 2026 real estate tax deadlines Carroll County, Virginia
- Commissioner of the Revenue: installments and transfers after January 1 Floyd County, Virginia
- Commissioner of the Revenue: tax calendar Wythe County, Virginia