Sale of rental property... can I include property tax payments at closing of rental property sale? its in my closing statement that i paid for 2019 and 2020 until sold

[JotikaT2]

Those would actually be included as a rental expense on your Schedule E.  They would not be included as an adjustment to your cost basis as they are tax deductible expenses.

You would enter your property tax expense information for a rental property in the federal interview section.

1. Select Income & expenses 
2. Scroll down to see All Income and select Rentals, Royalties, and Farm
3. Select Rental Properties and Royalties (Sch E) 
4. Select Edit Another Rental or Royalty property as prompted.
5. Select Yes to review your rental and royalty information
6. Continue through the screens until you see the page titled Rental and Royalty Summary.  Select Edit to the right of the applicable property and enter your property taxes as expenses in this section.

[hemj1111]

Ok thank you for the clarification that taxes are an expense not to be added to cost basis. However, I paid the entire year of 2019 property taxes and a pro-rated amount in 2020 up to the date of sale. It was $3326 for 2019 and $1045 for 2020 paid at closing. I’m allowed to add the total of $4371 as a property tax Expense for 2020 return?

[Carl]

Whatever property taxes you paid in 2019, are deductible on the 2019 tax return. TO a point, it does not matter what year you paid *for*.

Whatever property taxes yo upaid in 2020 are deductible on the 2020 tax return. To a point, it does not matter what year you paid *for*.

It is not common for property tax payments to be for a calendar year. For example, my yearly taxes are due every Nov 1st. It pays taxes for the period from Nov 1st, through Oct 31st of the next year. But I deduct those taxes as a rental expense in the tax year I "actually" pay it, regardless of the fact the period crosses the calendar year.