How should I treat these property tax payments?

[Deleted]

In round numbers:

DH and I paid $1,900 in property taxes on House A in June, 2015. (In that state, property taxes are collected in June and December.) We sold House A on July 1 and bought House B.

There were no adjustments for the property taxes we paid on the HUD statement for House A; it may be that the actual tax period was the first half of 2015 so no adjustments were necessary.  House B was across the state line, where property taxes are paid annually in December in arrears.  At closing, the amount we owed the seller was reduced by $1,700 because they'd been in the house half of 2015 and annual property taxes were $3,400.  In December of last year we paid $3,400 in property taxes on House B.

So, do we include $5,300 on our Federal taxes for 2015 ($3,400 + $1,900)?  Or do we deduct $3,600 (1,900 + $3,400 -$1,700)?

Please tell me we can deduct $5,300!

[Value Buy]

Works for me, but what do I know

[TheOtherMe]

The amount you owed the seller was reduced by the $1700 that they owe for property taxes.  The $3400 is not all deductible by you as you did not own the property all year.  You need to look at it like they reimbursed you $1700.  Your deduction is $1700 + $1900 for $3600.

I used to make that adjustment a lot when I audited individual tax returns way back when.  Different states treat property taxes differently as to how current they are on the payments. 

If you had a mortgage and the taxes were escrowed, the amount you paid in State A will be on your Form 1096. 

When I moved here, it had been assessed as land only, so the property taxes were only $70 x 2 for $140.  Didn't own the house long enough for the interest to be high enough for me to itemize.  Yes, the taxes gradually have increased.

[Deleted]

Jan 12, 2016 20:23:25 GMT -5 TheOtherMe said:

The $3400 is not all deductible by you as you did not own the property all year.  You need to look at it like they reimbursed you $1700.  Your deduction is $1700 + $1900 for $3600.

<snip>
If you had a mortgage and the taxes were escrowed, the amount you paid in State A will be on your Form 1096.

Thanks. I suspected that. We do have a mortgage but pay our own taxes. Documentation of what we actually paid plus the HUD statements from the closing a should be enough to back up the deduction.

[TheOtherMe]

That will do it should be unlucky and get audited.