No,
Enter 500,000.
In your situation, the taxes the Buyer paid you (because you had paid the property taxes early) does NOT get added to the sales proceeds.
The "On Demand (?)" box is saying that if a person sells a house with back taxes due, and the Buyer pays those back taxes, that would get added to the sales price. In other words, if I did not pay the last three years of property tax totaling 5,000, and the Buyer pays me 100,000 cash and also pays those 5,000 taxes off for me when he buys my house, that would be the same as if the buyer paid me 105,000. That would be the only time the taxes paid would be added to the sale price.
In your situation, you paid taxes in August, ahead, so when you closed, you had paid 2,051 more in property tax than what is attributed to the time you were living in the house. Rather than trying to get the state to refund you the "extra" tax you pre-paid, they just have the new owner pay you, (since you already paid the state in August)
As mentioned earlier, if you claim property tax paid as an Itemized deduction, don't include the 2,051 that the Buyer gave you. In other words, if you paid 3,000 each of three questers, but the buyer reimbursed you for 2,051, you can only claim 6,949 in Property Taxes paid on that house. (the 9,000 you sent in to the state less the 2,051 the buyer gave you)
The property tax you can claim as a deduction has nothing to do with reporting the sale of the house.
The 2,051 does not affect the sale price. You needn't enter it nor adjust for it in the "Sale of Home" section.
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