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Author: heftyhefty Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121592  
Subject: Sold Home, Property Tax Question Date: 2/11/1999 6:03 PM
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We sold our condo in June. At that time, everyone divies up their portion of the tax burden for the year and prorates it out on the settlement sheet (Property taxes in Texas are paid for the last year not the coming year). Can I deduct my portion of those property taxes on my 98 taxes? The new owner would be responsible for the actual payment at the end of the year, but I did pay for half of those taxes we we sold the condo.

To have my cake and eat it too, I plan to fully deduct property taxes of the new home we bought even though the previous owners paid half of the taxes when we bought it. I have those receipts. Dont have receipts for the condo though.
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Author: TheBadger Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10059 of 121592
Subject: Re: Sold Home, Property Tax Question Date: 2/12/1999 11:30 AM
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Yes, you get to deduct your prorata share of real estate taxes on the Condo sold; even though the buyer really pays them to the local taxing authority at some later date.

No, you can not have your cake & eat it too. You are on the reverse side on the purchase transaction. Your allowable deduction on the purchased residence will be equal to the total taxes you actually pay less the amount of prorata taxes paid to you by the prior owner.

For more info, see IRS Regs. §1.164-6(a) & §1.164-6(a)(b)(1); or U.S. Master Tax Guide Para. 1032 - 1038.

In short, the IRS will not allow buyers & sellers of real estate to double dip on real estate taxes.




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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10152 of 121592
Subject: Re: Sold Home, Property Tax Question Date: 2/13/1999 6:55 PM
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[[We sold our condo in June. At that time, everyone divies up their portion of the
tax burden for the year and prorates it out on the settlement sheet (Property
taxes in Texas are paid for the last year not the coming year). Can I deduct my
portion of those property taxes on my 98 taxes? The new owner would be
responsible for the actual payment at the end of the year, but I did pay for half of
those taxes we we sold the condo.]]

Sure...that proration was for YOUR portion of the taxes during the time that you owned the property, right? So those taxes would be considered property taxes paid by you, and deductible by you in the year of payment.

[[ To have my cake and eat it too, I plan to fully deduct property taxes of the new
home we bought even though the previous owners paid half of the taxes when
we bought it. I have those receipts. Dont have receipts for the condo though.]]

How can you do that?? If you are not both LIABLE for the taxes and PAY the taxes, you can't take the deduction. IRS auditors aren't stupid. They know to review these types of transactions when properties change hands. In fact, your excrow company is REQUIRED to report those "allocated" taxes to the IRS via the IRS Form 1099.

So don't get too tricky.

TMF Taxes
Roy

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