Originally Posted by blacklab2005
We purchased a new home in 2015, and we paid 3900 dollars in property taxes in December. At closing, we were credited by the seller for his portion which was 1950 because we closed exactly middle of the year. The tax bill that was sent to us was for the entire amount, but I wonder how much of this we can put on Schedule A, is it the entire amount, or does it have to be reduced by the amount credited on the HUD for the seller's portion.
you can claim only the half of the amt , $1.9KYOU actually paid; The $1.9Khas no tax consequences to you; it is neither income nor is it deductible. The seller deducts that for his property taxes paid. It's not income to you, as you just paid it to the tax district on the seller's behalf. Indeed, for tax purposes, the IRS automatically treats the seller as having paid the property taxes up to the date of sale, and the buyer having paid the taxes due after the date of salethe buyer gets a deduction for the prorated amount of real estate tax due after closing, and the seller gets the same deduction for the taxes due before closing--even if one or the other didn?t actually pay them.
BASICALLY, regardless of which year's property tax you're paying, you may deduct the property taxes in the year that you actually pay them, not the year they were due. In addition, you need to use the year the money actually goes to the taxing authority. A common disconnect is property taxes you pay through your mortgage lender with an escrow account. Instead of deducting the money in the year that you put the money in the escrow account, you must wait until the year it is paid from the escrow account.unless you itemize deductions on sch A of 1040(aslongas your itemized deduction amt exceeds your standard deduction), you can not deduct it on your federal return but may still claim it on your state return.