Thank you for this discussion. Related question: I live in Illinois, which has property taxes. When one sells property, the seller pays the following half-year's or year's property taxes (because the current year's taxes are actually billed the following year). On Schedule E while I owned the rental property, the year's billed taxes are deducted as an expense. So are the taxes that are part of the closing costs listed among the deductions as part of the sale (reducing capital gains), or lumped in with Schedule E expenses? I'm figuring the former but want to make sure. (It may not make a difference or only a minor difference on the overall tax bill in the end, depending on the real estate capital gain tax rate vs. general income tax rate.)
