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Lev
Lev, Tax Advisor
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If I bought a house on November 1 2010 and the property tax

Resolved Question:

If I bought a house on November 1 2010 and the property tax due date is December 5 for $4,800 and I pay $800. I deduct the $800 on Schedule A for 2010. Now I sell my house 18 months later for a gain of $38,000 but in order to get a clear title I have to pay back taxes of $4000 that the sell never paid when I bought the house in 2010. I paid the $4000 and claim on my taxes for 2012.
Have I acted properly?
Submitted: 3 years ago.
Category: Tax
Expert:  Lev replied 3 years ago.

LEV :

Hi and welcome to Just Answer!

LEV :

You can deduct real estate taxes imposed on you. You must have paid them either at settlement or closing, or to a taxing authority (either directly or through an escrow account) during the year.

LEV :

Real estate taxes are generally divided so that you and the seller each pay taxes for the part of the property tax year you owned the home. Your share of these taxes is fully deductible if you itemize your deductions.


Division of real estate taxes. For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. You (the buyer) are treated as paying the taxes beginning with the date of sale. This applies regardless of the lien dates under local law. Generally, this information is included on the settlement statement you get at closing.


You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the entire amount. You each can deduct your own share, if you itemize deductions, for the year the property is sold.

LEV :

If the property was purchased on November 1 2010 and 2010 tax liability was $4800 - your share is $4800*2/12=$800 - so you correctly deducted that amount on your 2010 tax return.

LEV :

As you paid additional $4000 - that will be added to basis and will reduce your taxable capital gain.

Customer:

ok so the 4000 should not have been claimed because it reduce my capital gain, is that correct.

LEV :

If you paid any costs (including real estate taxes) for the seller - that will be treated as part of the sale price - and will be added to the basis.

LEV :

You should not claim real estate taxes paid for the seller as real estate tax deduction regardless in which year they are paid.

Customer:

ok I think I get it now. Thank you for your help.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22635
Experience: Taxes, Immigration, Labor Relations
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