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CalAttorney2, Lawyer
Category: Real Estate Law
Satisfied Customers: 10244
Experience:  I am a civil litigation attorney with experience representing HOAs, homeowners, businesses and others in real estate matters.
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I live in Illinois. Yesterday, I sold a piece of real estate

Customer Question

I live in Illinois. Yesterday, I sold a piece of real estate in Cass County. The price agreed to was $10,000.00 for 2 1/2 lots. The Real Estate tax notices do not come out until May, 2016, but I paid out of the $10,000, the taxes up until this month and made out the check to the buyer, to pay the taxes in May, 2016. My question is why do I not get the tax credit for 2015 on that property? Rather, the Lawyer says the buyer gets the tax credit. That just does not seem fair to me as I paid the money from the agreed price of $10,000, reducing what I profit I made on the property.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  CalAttorney2 replied 1 year ago.

Dear Customer,

The tax credit goes to the individual or party that has the tax obligation, not to the individual or party that actually pays the tax.

(We see this question often with parties that are paying a mortgage for a family member where part of the mortgage payment goes towards the property taxes on the property. The taxes are owed by the owner of record, not the party that is paying it on their behalf, so the owner gets a tax credit, not the family member paying the mortgage/tax bill).

In your case, you negotiated a deal with the buyer, where you paid these taxes on the buyer's behalf - but this did not affect the buyer's ultimate obligation to pay these taxes in May. The buyer is the one that is ultimately responsible to ensure these taxes are paid, and they are the one that gets to claim the tax credit.

Customer: replied 1 year ago.
I understand, but it still does not seem fair. Not only do I not really get the price for the property that I had asked for, but I pay for 9 mons. Of taxes on this property and they pay foe less than 3 mons. And they get the tax credit, but I understand that this is the law. It just does not seem fair to the Seller.
Expert:  CalAttorney2 replied 1 year ago.

Not every jurisdiction does this, but many (the majority) do - the policy is driven by the argument that it reduces administration costs to the county or city tax collector by eliminating the claims for partial tax year billing, etc.

I cannot really defend or advocate for the policy here, it is fairly ingrained in most jurisdictions, but it is possible that with almost universal reliance on digital recordkeeping, that it will be possible to split tax liability in the future.

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