In a transaction with a sales price of $475,000, an LTV of 90%, and a tax rate of $1.97 per $100, what is the prorated credit due to the buyer if closing is on July 17th?

To determine the prorated credit due to the buyer at closing, we first need to calculate the annual property tax based on the sales price and the local tax rate.

1. Calculate the assessed value for tax purposes, which in most cases corresponds to the sales price of the property. In this scenario, the sales price is $475,000.

2. Calculate the annual tax amount using the tax rate of $1.97 per $100. We can find the annual property tax amount in the following steps:

[

\text{Tax rate as a decimal} = \frac{1.97}{100} = 0.0197

]

[

\text{Annual tax} = \text{Sales price} \times \text{Tax rate} = 475,000 \times 0.0197 = 9,357.50

]

3. Now, determine the daily tax amount since we need the prorated amount from January 1st to July 17th (which is 198 days). The daily tax can be calculated as follows:

[

\text{Daily tax} = \frac{\text{Annual tax}}{365} =