The Deductions for Senior, Disabled, or Surviving Spouse are prorated upon sale. Which option describes this treatment?

• A. Prorated
• B. Not prorated
• C. Deferred
• D. Refunded

Answer: (A)

At sale time, deductions that reduce property taxes for qualifying seniors, disabled persons, or a surviving spouse are allocated between the buyer and the seller based on ownership days in the tax year. This prorated treatment ensures that each party only benefits for the portion of the year they actually owned the property. In practice, the closing statement is adjusted so that the seller’s share covers the days they owned before closing and the buyer’s share covers the days after closing.

For example, if the annual exemption lowers the tax bill by $500 and the seller owned the home for 200 of the 365 days in the year, while the buyer will own it for the remaining 165 days, the seller would be credited for 200/365 of $500 and the buyer would assume 165/365 of $500. This prorated split reflects fair allocation—not all of the deduction goes to one party, and it isn’t deferred or refunded, it’s divided according to ownership duration.