Real Estate back taxes paid when house purchased

[andreawick]

Here is the fact pattern:

Taxpayer bought a house in 2011 at auction.

Taxpayer paid back taxes that were due on the house for 2009 and 2010.

Are those back taxes deductible on the 2011 tax return?

My gut feeling is yes? But I haven't researched it -- any ideas?

Thanks!

[rangerj]

My gut feeling: Property taxes are generally deductible by the person upon whom they are IMPOSED in the year in which they are paid or accrued. See section 164(a)(1) and Regulation section 1.164-1(a). The taxes in your question were NOT imposed upon the buyer as taxes, but are a cost to clear the title (get the lean released) and should be added to basis. Do the research, as there is very little in the tax code that you cannot find an exception to.

[mwcpa]

As noted.... This is added to the cost basis of the buyer.... These are not for the period of ownership by the buyer.... 

Think of it this way... someone buys a piece of property at an auction by local government to settle a real estate / property tax debt... the buyer makes a bid and buys the property for the back taxes and takes possession of the property... does that lead to an immediate tax deduction?

[andreawick]

Thanks!