Let's start by looking at property tax amounts and how they get paid. The overall taxes on the HUD1 settlement statement will include first, for seller paid taxes in advance and secondly, for the escrow account. In Connecticut, the majority of local towns collect taxes twice a year and they are due in two installments, January 1st and July 1. Property taxes are also due in advance so that you must pay for the following 6 month period ahead of time. Let's say, for example, that you are looking at a single family residence which has annual taxes at $6,000.00. The monthly escrowed amount for your mortgage payment is 1/12 of the total or $500.00 per month. Now suppose you will close on your home on May 15. First, you will owe the adjustment to the seller for 1.5 months, the amount they paid from May 15 until June 30. Secondly, you will need an additional 6 months at closing into the escrow account since you close May 15, and your first mortgage payment is July 1, so that the escrow can forward to the town the 6 months taxes. So the final totals of 1.5(seller) + 6(escrow) = 7.5 months. Or 7.5 x $500 = $3,750.00 needed for property taxes at closing.