National Real Estate Practice Exam

Which party is typically responsible for the payment of property taxes?

1. Seller

2. Buyer

3. Agent

4. Title Company

The correct answer is: Buyer

In real estate transactions, the responsibility for the payment of property taxes typically falls to the buyer. This is because once the sale is finalized, the buyer assumes ownership of the property and, consequently, the associated responsibilities, including ongoing property tax obligations. Buyers must be aware of the property tax situation before purchasing a property, as property taxes can affect their overall costs of ownership. Often, property taxes are prorated at closing, meaning that the seller pays for the portion of the tax year they owned the property, while the buyer pays for the remainder of the year. Thus, understanding this allocation is crucial for accurate financial planning related to homeownership. The other parties typically do not take on the responsibility of paying property taxes after the sale is complete. The seller is usually responsible for taxes owed up until the closing date, agents operate on commission from the transaction, and title companies facilitate the transfer of ownership but do not bear tax liabilities themselves.