When a property is sold, who pay the taxes, the buyer or the seller?
It comes down to when the closing occurs. If taxes have been paid for by the seller, until that day, then the buyer will pay the remaining year of taxes. If the seller pre paid for the entire year, then based on the closing date, the buyer will have a debit (they will have to pay, beyond the closing date) and the seller will get a credit, for what they paid beyond the closing date. Attorneys or bank will usually figure this all out and will be on the settlement form.
The seller gives the buyer a prorated share of the taxes at close. The buyer pays the taxes when they become due.
You question property taxes, right?
Here is what happens at the closing with property taxes:
#1 buyer pays for taxes prepaid by the seller - tax-deductible expense for the buyer.
#2 buyer gets a credit for taxes unpaid by the seller. Even though the buyer will have to pay the whole installment of taxes, the seller's portion is not a tax-deductible expense to the buyer, because the payment is offset by the credit buyer receives on closing.
Let me know if you have additional questions or need clarification.
Clarification to my post above: the buyer's and seller's portions of taxes are pro-rated based on the sale date.
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