Guides › Updated 2026-10-31
How to Calculate Prorations on the Real Estate Exam (30/360 and 365)
TL;DR: Find the daily rate (annual amount / 360, or monthly / 30), multiply by the days each party owned the item, then decide who owes whom. Unpaid and used by the seller: seller debit, buyer credit. Prepaid by the seller and used by the buyer: seller credit, buyer debit. The exam question states the convention; always follow it.
The four-step method
- Identify the item (taxes, rent, loan interest, insurance) and whether it is paid in advance or in arrears.
- Find the daily rate. Annual amount / 360 (30/360), or / 365 (actual/365), or monthly amount / 30.
- Count the days each side owns. Check who owns the closing day.
- Assign debits and credits. Every proration shows up twice, one side debited and the other credited.
30/360 versus actual/365
| Convention | Daily rate for a $4,320 annual bill | Days Jan 1 to June 14 |
|---|---|---|
| 30/360: every month 30 days, year 360 days | $4,320 / 360 = $12.00 | 5 x 30 + 14 = 164 |
| Actual/365: real calendar days | $4,320 / 365 = $11.8356 | 165 (non-leap year) |
The results differ: $12 x 164 = $1,968.00 under 30/360, while $4,320 / 365 x 165 = $1,952.88 under actual/365. Neither is “wrong.” They answer different questions. The exam question states which one to use, so never choose by habit.
Example 1: Property taxes unpaid at closing
Annual taxes are $4,320 for the calendar year, unpaid, and closing is June 15. Use 30/360 and assume the buyer owns the day of closing.
- Seller’s days: Jan 1 through June 14 = 5 months x 30 + 14 = 164 days
- Daily rate: $4,320 / 360 = $12
- Seller’s share: $12 x 164 = $1,968
The seller owes the buyer, who will pay the full bill later. Seller debit $1,968; buyer credit $1,968.
Variation: taxes already paid
If the seller had already paid the whole $4,320 for the year, the buyer reimburses the seller for the buyer’s days: 360 - 164 = 196 days, and $12 x 196 = $2,352. Seller credit $2,352; buyer debit $2,352. Check: $1,968 + $2,352 = $4,320, the full bill.
Example 2: Prepaid rent
The seller collected $1,500 for the month on the 1st. Closing is on the 18th, the buyer owns the day of closing, and the month has 30 days.
- Buyer owns the 18th through the 30th = 30 - 18 + 1 = 13 days
- Daily rent: $1,500 / 30 = $50
- Buyer’s share: $50 x 13 = $650
The seller holds money that belongs to the buyer. Seller debit $650; buyer credit $650. Also note that tenant security deposits are generally transferred in full to the buyer, not prorated.
Example 3: Interest on an assumed loan (paid in arrears)
The buyer assumes a $180,000 loan at 6%. Interest is paid in arrears on the 1st for the prior month, so on a September 12 closing, September interest is unpaid. Use 360 days; the buyer owns the day of closing.
- Daily interest: $180,000 x 0.06 / 360 = $30
- Seller’s days: September 1 through 11 = 11 days
- Seller’s share: $30 x 11 = $330
Seller debit $330; buyer credit $330. The buyer will pay the lender the whole month’s interest on October 1. Under actual/365 the same problem gives $180,000 x 0.06 / 365 x 11 = $325.48, so convention matters even on small amounts.
Example 4: Prepaid insurance the buyer takes over
The seller paid a $1,440 annual premium for a policy that began March 1. Closing is August 16 and the buyer owns the day of closing. Use 30/360.
- Days used by the seller: March 1 through August 15 = 5 x 30 + 15 = 165 days
- Unexpired days: 360 - 165 = 195 days
- Daily premium: $1,440 / 360 = $4
- Buyer reimburses: $4 x 195 = $780
Seller credit $780; buyer debit $780. If the buyer buys a new policy instead, there is nothing to prorate; the seller cancels the old one and gets a refund from the insurer.
Quick reference: who gets what
| Item | Typical situation | Seller | Buyer |
|---|---|---|---|
| Taxes unpaid (in arrears) | Seller owes for days owned | Debit | Credit |
| Taxes prepaid | Buyer reimburses | Credit | Debit |
| Rent collected in advance | Seller passes on buyer’s days | Debit | Credit |
| Assumed loan interest in arrears | Seller owes accrued days | Debit | Credit |
| Prepaid insurance, buyer assumes | Buyer reimburses unused part | Credit | Debit |
Common mistakes
- Counting the closing day for the wrong party.
- Using 365 when the question said 360.
- Reversing debit and credit. Ask who owes whom first.
- Subtracting dates without counting 30-day months.
For all the other formulas on one page, see our math formulas cheat sheet or the formulas reference.
Practice
Proration questions are easy to get wrong under time pressure, so repeat them until the steps feel automatic. Take the free quiz for your state, such as Texas, Florida, California or New York, or use the GablePrep app for step-by-step solutions.
GablePrep is an independent study resource, not affiliated with any state real estate commission or testing provider. We are not a pre-licensing course and this is not legal advice. Local closing customs vary, so confirm the rules your exam follows in your state’s handbook.
Frequently asked questions
Do I use a 360-day or 365-day year for prorations?
Use the one the question states. Many exam problems specify a 360-day year with 30-day months. If the question names a different convention, such as actual days or a 365-day year, follow the question. If you are unsure how your exam treats it, check your state's candidate handbook or course materials.
Does the buyer or seller own the day of closing?
It depends on the convention the question states. In the examples here, the buyer owns the day of closing, so the seller is charged through the day before. Some problems reverse this, and the question will say so.
How do I know whether it is a debit or a credit?
Ask who owes whom. If the seller used something that is unpaid, the seller owes the buyer: seller debit, buyer credit. If the seller prepaid something the buyer will use, the buyer reimburses the seller: seller credit, buyer debit.
Are security deposits prorated?
No. A tenant's security deposit is generally transferred in full to the buyer (a credit to the buyer and a debit to the seller), not prorated by days.
Independent exam prep. Not affiliated with any state real estate commission or testing provider. Not an approved pre-licensing course. Not legal advice. Facts verified on 2026-10-31; always confirm with your state’s official handbook.