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Old 12-01-2015, 09:24 AM
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Paying property (real estate) taxes a year in advance

I am considering paying my 2016 property (home) taxes on Dec 30, 2015. I will then have paid both 2015 and 2016 taxes in the same year (2015). I am under the impression that I can then use both payments on my itemized deduction line item (real estate taxes paid) for 2015 Fed Income Tax filing. Is this correct? Thank you.



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Old 12-01-2015, 12:42 PM
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Quote:
Originally Posted by hookdog View Post
I am considering paying my 2016 property (home) taxes on Dec 30, 2015. I will then have paid both 2015 and 2016 taxes in the same year (2015). I am under the impression that I can then use both payments on my itemized deduction line item (real estate taxes paid) for 2015 Fed Income Tax filing. Is this correct? Thank you.
Corrrect; In general, an expense cannot be deducted if paid in advance. This is true for both the cash basis method of accounting and the accrual method of accounting ;however,under The 12-month rule is satisfied I mean, ,if expenditure does not extend beyond the earlier of 12 months
you may claim those taxes on SCh A of 1040 on your 2015 return.In general, taxes are deductible in the year you pay them; you can generally deduct prepaid real estate taxes in the year of the prepayment as you are a cash basis taxpayer ( most TPs are cash basis TPs)and you don't live in a jurisdiction where the taxing authority considers prepayment a "deposit. You need to know that taxes placed in escrow generally aren't deductible until they are paid to the taxing authority.



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