Sellers often ask a more specific question: who actually sends money to the taxing authority, and who bears the cost? Those can be different people. The settlement statement shows the real split through a seller debit, a buyer credit, or a reimbursement.
Erie County adds wrinkles. A single home can face county, town or city, village, and school district bills, each on its own schedule. This guide covers closing-date math, paid and unpaid bills, mortgage escrow, back taxes, and why proration has nothing to do with capital gains tax.
Key Takeaways
- The seller customarily bears taxes through the contract's closing cutoff; the buyer bears them afterward.
- Proration appears as a credit or debit on the settlement statement, not as two payments to the county.
- Check every Erie County bill: county, town, city, village, and school.
- Capital gains tax is a separate income-tax matter.
How Erie County Property Tax Proration Works
Proration allocates the tax burden by ownership time. The written purchase contract controls, so any negotiated change overrides the usual approach.
What closing-date cutoff should be used?
The City Bar's posted residential contract, section 18, apportions taxes "as of midnight of the day before the day of Closing." In practice, the seller's share runs through the day before closing, and the buyer's share starts on closing day. That is contract-form language, not a countywide statute, so confirm the exact dates in your own contract.
How is the daily tax amount calculated?
Divide the tax for the applicable fiscal period by the day count the closing professional uses, then multiply by each party's days. The City Bar template does not fix a 360- or 365-day divisor, so ask which convention applies.
For a federal comparison, IRS Publication 530 allocates by ownership days. Its example uses a $730 annual tax and a September 1 purchase: the buyer owns 122 days, and 122/365 gives a $244 buyer share.
Hypothetical example: A home has a $6,000 annual county tax on a calendar-year bill, and closing is July 1.
- Seller owns 181 days (January 1 through June 30): about $2,975
- Buyer owns the remaining 184 days: about $3,025
- If the seller already paid the full bill, the buyer reimburses roughly $3,025 at closing
- If the bill is unpaid, the seller credits the buyer roughly $2,975
Which Erie County taxes must be included?
Fiscal periods differ, so each bill needs its own proration:
- County and town: January 1 to December 31
- Buffalo city: July 1 to June 30, with halves due about July 31 and December 31
- Villages: Williamsville's 2026 year runs June 1 to May 31, with taxes due July 1
- School districts: July 1 to June 30; Orchard Park's 2026-27 bills were due October 15 before late charges
These are local examples, not universal deadlines. Verify current bills, receipts, exemptions, and assessment details through Erie County Real Property Tax Services and the relevant municipality or district rather than a generic estimate.
Who Pays What at Closing: Seller, Buyer, and Closing Professionals
The seller generally bears the share for the period before the cutoff, and the buyer bears the share after closing. Negotiated terms can change that.
Seller responsibilities before and at closing
The seller's share may come out of sale proceeds as a debit, show up as a credit to the buyer, or be paid directly. How it appears depends on whether the bill is paid, outstanding, or being held.
Disclose these early so the settlement statement is right the first time:
- Unpaid bills
- Disputed assessments
- Exemptions and pending adjustments
- Any known tax liens
Buyer responsibilities after closing
A buyer may owe a full upcoming bill even after the seller contributed a prorated amount at closing. Know whether the adjustment is a reimbursement or a payment toward a future bill.
Also confirm how future taxes will be paid. Under Regulation X, the lender's initial escrow statement is due at settlement or within 45 days and itemizes estimated taxes, insurance, and monthly contributions. The first escrow deposit is separate from the seller's proration.
The role of the contract, attorney, title professional, and lender
The contract should state the proration method, cutoff, treatment of unpaid or estimated taxes, and any post-closing re-proration. The City Bar template includes an error-correction clause that survives closing.
Per NYSBA guidance, attorneys review the contract and closing documents. The lender or title company typically prepares the settlement statement. The lender handles the buyer's escrow requirements. Confirm who verifies each tax bill.
Our buyer roadmap lists attorney approvals, lender underwriting, and a mortgage commitment as under-contract milestones. Our transaction coordinator tracks attorney approvals against the contract.
Questions to ask before signing
- Which tax periods are included?
- Are any figures estimated?
- How will later adjustments be handled?
- Does an exemption or delinquency change the math?
Paid, Unpaid, and Escrowed Taxes in an Erie County Sale
How taxes show up on the closing disclosure depends on payment status. CFPB rules cover credits in both directions.
If the seller already paid the applicable taxes
The buyer reimburses the seller for the buyer's share, shown under "Adjustments for Items Paid by Seller in Advance" with applicable dates. Check that the bill, tax period, and credit match.
Don't assume one payment covers everything. A county payment does not cover separate town, city, village, or school charges.
If the taxes are unpaid or delinquent
Items unpaid by the seller appear as a seller credit to the buyer. The City Bar template supports that credit when:
- Unpaid taxes include interest and penalties through at least five business days after closing
- Figures are backed by official bills
- Purchase-price funds can discharge seller liens with recordable satisfactions
Penalties escalate quickly. Orchard Park school taxes carried a 7.5% penalty from October 16 and 9.0% from November 3 in 2026; unpaid bills then moved to the county roll. Erie County can foreclose on county tax liens unpaid for two or more years.
If proceeds fall short, the bill is disputed, or the parties disagree, talk to the closing attorney early. A sale is not guaranteed to proceed automatically.
If the final tax amount is not available
When a final bill isn't out, the template applies the prior fiscal period's rate to the latest assessed valuation. Errors get corrected within a reasonable time after closing. It does not set a fixed holdback, so ask:
- Is there an escrow holdback, and how was it sized?
- Who controls the funds?
- When is any balance released?
How mortgage escrow fits in
The seller's escrow account ties to the loan payoff. Servicers generally refund the balance within 20 business days after payoff, or net it against the mortgage balance. The buyer's new escrow account is separate. Don't count a refund and the proration as the same money.
Exemptions, assessments, and future changes
STAR does not simply follow the home. DTF guidance directs discontinuance of the seller's exemption after transfer, though a buyer purchasing after taxable status date may receive the prior owner's Basic STAR in the first year. New owners register for the credit after taking title.
Taxable assessment equals assessed value minus exemptions, and the rate per $1,000 applies to that figure. A buyer's future bill can still differ from the seller's because of exemptions, reassessment, or rate changes.
Property Taxes Are Not the Same as Capital Gains Tax
Proration is a closing adjustment. Capital gains tax is separate. It depends on your gain: amount realized minus adjusted basis. Selling expenses lower the amount realized, and qualifying improvements raise basis.
Under IRS Topic 701, a seller may exclude up to $250,000 of main-home gain, or $500,000 for qualifying joint filers. Ownership and use must each total at least 24 months in the five years before sale. Receiving Form 1099-S still requires reporting even when the gain is excludable.
Talk to a tax professional if you are selling:
- Rental or investment property
- An inherited home (basis is generally fair market value at death)
- A second home
- A home after large improvements
- A property with forgiven mortgage debt
Nonresident sellers should also check New York's IT-2663 estimated tax payment. A real estate team can coordinate transaction information but cannot give tax advice.
Closing Checklist for Erie County Sellers and Buyers
Before closing
- Gather current tax bills, receipts, exemption notices, and assessment letters
- Collect mortgage escrow details and any delinquency or appeal records
- Confirm the property's exact tax jurisdictions
- Ask the attorney or title professional to explain the proration language and any estimates
Review the settlement statement
- Verify each tax line, period, billing amount, day-count method, and allocated days
- Check credits, debits, penalties, interest, and holdbacks
- Sellers: confirm the mortgage payoff and later escrow refund separately
- Buyers: confirm how your lender will fund future taxes
Carol Klein - Century 21 Northeast helps Western New York sellers understand estimated net proceeds and coordinates questions with the closing attorney or title professional. Legal and tax determinations belong with licensed professionals.
After closing
- Keep the settlement statement, tax receipts, closing disclosure, contract, and any re-proration agreement
- Review upcoming tax bills promptly
- Contact the closing professional if a promised adjustment, escrow release, or tax payment doesn't appear
Frequently Asked Questions
Who will pay property tax, buyer or seller?
Both, usually by ownership period. The contract and closing statement set the exact credit, debit, or payment.
How much will I pay in taxes when I sell my house?
It depends on your Erie County bills, closing date, day-count method, payment status, exemptions, and contract terms. Ask the closing professional for an itemized calculation.
Do I pay capital gains on my primary residence?
Possibly, if gain exceeds the exclusion or you miss the ownership and use tests. Check current IRS rules with a tax professional.
How do I avoid capital gains tax on selling a house?
No universal method exists. Some sellers qualify for the primary-residence exclusion; review IRS and New York guidance with a tax professional.
Can I sell my home if I owe back taxes?
Often yes. Delinquent taxes, penalties, interest, and liens generally get resolved at closing, sometimes from proceeds. Contact the closing attorney early.
