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Quick real estate tax deduction question

Y

yg17

macrumors Pentium
Original poster
Aug 1, 2004
15,027
3,002
St. Louis, MO
First of all, I know I probably should be contacting a tax professional, but I don't have one since my taxes are simple enough that I do them myself, and this is an easy enough question that I'm sure someone here can answer it.

I bought a house in 2013 and just got my 1098 for interest and real estate taxes. For real estate taxes paid, it shows the full amount of my taxes, which makes sense, but since a chunk of that came from the seller at closing, I'm under the impression that I need to pro-rate that amount so I only deduct what I paid, is that correct? Is that as simple as $X/365 * Number of days between closing and 12/31?

Thanks in advance
 
Macky-Mac

Macky-Mac

macrumors 68040
May 18, 2004
3,526
2,583
maybe this will help?

IRS

Division of real estate taxes. For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. You (the buyer) are treated as paying the taxes beginning with the date of sale. This applies regardless of the lien dates under local law. Generally, this information is included on the settlement statement you get at closing.

You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the entire amount. You each can deduct your own share, if you itemize deductions, for the year the property is sold.
Click to expand...
 
Y

yg17

macrumors Pentium
Original poster
Aug 1, 2004
15,027
3,002
St. Louis, MO
Macky-Mac said:
maybe this will help?

IRS
Click to expand...

Yeah, I saw that. I guess my confusion is figuring out the prorated amount. If I use the formula I mentioned in the OP, I get one number, if I take my tax bill and subtract the amount the seller paid on the HUD-1 settlement statement, line 211, I get an entirely different number, about a $125 difference.

Now I'm thinking subtracting the amount from the HUD-1 from my tax bill makes sense, since they're basically working with estimates when they calculate those, and taxes on this house did go up a bit over 2012, so I must've picked up the rest through escrow. But still, not sure which number to use.
 
mobilehaathi

mobilehaathi

macrumors G3
Aug 19, 2008
9,368
6,352
The Anthropocene
yg17 said:
Yeah, I saw that. I guess my confusion is figuring out the prorated amount. If I use the formula I mentioned in the OP, I get one number, if I take my tax bill and subtract the amount the seller paid on the HUD-1 settlement statement, line 211, I get an entirely different number, about a $125 difference.

Now I'm thinking subtracting the amount from the HUD-1 from my tax bill makes sense, since they're basically working with estimates when they calculate those, and taxes on this house did go up a bit over 2012, so I must've picked up the rest through escrow. But still, not sure which number to use.
Click to expand...

Well if you want my utterly unprofessional advice (and you don't want to pay for professional advice), I say err on the side of giving the government more money. No one ever got in trouble for doing that, and it seems like the difference is paltry.
 
sviato

sviato

macrumors 68020
Oct 27, 2010
2,428
381
HR 9038 A
If I recall correctly (been a while since my tax course)...the US prorates using a 360 day year, try using that.
 
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