Investor · Dixon, IL · Member since 2016 · 2 posts · 0 votes
My partner and I recently closed on a buy and hold rental. In the closing, we were credited with the 2015 property taxes due later this year as well as the pro rated 2016 taxes. All that is fine and good. My question revolves around my federal/state tax return I will file next year. Can I claim the full 2015 taxes and the pro rated 2016 taxes?
Investor · Dixon, IL · Member since 2016 · 2 posts · 0 votes
10y
Sorry for the lack of clarity. We bought. We will received the property tax bill later this year and pay the taxes with the funds the seller effectively gave us at the closing.
I'm just wondering how the IRS looks at this next March when I claim the taxes as an expense.
Also, it seems it would have been in the seller's best interest to pay the 2015 taxes himself. Is that commonly done?
CPA · Raleigh, NC · Member since 2013 · 1k+ posts · 2k+ votes
10y
@Dean Harrison you will either need to reduce your tax basis in the property by the full credit, or recognize the credit as income. Otherwise, you'd be double dipping (receiving a credit and then later writing off the same expenses).