TurboTax

File with experts
File your taxes
Experts at your fingertips

An expert helps with your taxes, or does them for you
TurboTax Expert Full Service

TurboTax Expert Assist

TurboTax Self-Employed
Prior year taxes
File myself
File myself
Do it yourself

We'll guide you step-by-step
TurboTax Do It Yourself

TurboTax Self-Employed

TurboTax Desktop
TurboTax Free

Activate your product

Prior year taxes
Business
Business
Business taxes

Get your T2 corporate return done right, your way
TurboTax Business

TurboTax Business Desktop
Tax situations
Tax situations
Tax situations

Find extra guidance for your big life moves
For investors

For 25 and younger

For self-employed

For new to Canada

For life changes
Resources
Resources
Resources

Explore tax tools, get tips, and read reviews
Personal income tax calculator

RRSP savings calculator

Learning hub

TurboTax support (FAQ)

TurboTax community
Pricing

Level 2

Question

Prorata taxes

Forum|Forum|4 years ago
March 6, 2022
1 reply
0 views

I bought a rental property on 6/1/21 in Colorado, a state in which property taxes are paid in arrears. At closing, the seller credited me $800 for 2021 taxes (1/1/21-5/31/21) that I'll pay in 2022. I paid no other taxes on the rental in 2021. What becomes of the $800?

Level 15

You may report the $800 as an expense against rental property income.

This IRS FAQ states:

You can deduct the ordinary and necessary expenses for managing, conserving and maintaining your rental property. Ordinary expenses are those that are common and generally accepted in the business. Necessary expenses are those that are deemed appropriate, such as interest, taxes, advertising, maintenance, utilities and insurance.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

Level 2

How can a credit on a settlement statement be considered an expense? Because it decreased the amount due at closing, I've concluded to reduce the property basis by $800.

Level 15

You should not reduce your cost basis by the $800 you received in property tax credit.

If you paid no property tax in 2021, you should use it to reduce your 2022 property tax expense.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"