@AndrewQQ wrote:
So I tske that the answer is "yes", you do use the tax credits/debits in both closings in concert with the 1098 amounts to come up with what you actually paid, whether that was on paper at the closings with the credits to buyer/seller and from the escrow amounts paid out (which is only what the 1098 reflects ). It's the total net amount that counts.
You need to determine each transaction separately. This can be complicated because you might pay taxes in advance, or in arrears, or on different dates. For example, in New York, the county tax bill is due Feb 15 for the period 1/1 through 12/31, and the school tax bill is generally due 9/15 for the period 7/1-6/30. In Illinois (I think) taxes are billed on 1/1 for the previous year.
The operative principle is you only can deduct taxes for periods time you owned the home.
For the sale; suppose you paid a full year on 1/15/19 and closed on 5/30 and the buyer gives you a credit. You reduce the amount of tax you report by the amount of the credit.
For the purchase, suppose you bought on 6/15 and paid the seller a credit toward the rest of the year. that counts as a deduction as if you had paid it directly to the town or county. Then you paid the 2020 tax bill on December 20, 2019. You would claim both the bill you paid and the credit to the seller, as if you had paid both to the town or county.
This does not require an "override" (which has a specific meaning in Turbotax). Simply report the true amount of tax you paid to the taxing authority (or seller) if it is different than the amount on the 1098.
