Solved: Can I claim pro-rated property tax paid with realt...
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
Mr-B
Level 3

Can I claim pro-rated property tax paid with realtor credit?

Hi,

 

I purchased a house in May. Since seller already has paid property tax for May & June, seller got credit for that in closing. That credit was added as part of my closing cost.  All my closing cost were paid with realtor credit. (Realtor gave credit from his commission money and took reduced commission).

 

Provided that, can I claim this pro-rated property tax for 'May & June' in my Federal & California tax filings though it was paid with realtor credit?

1 Best answer

Accepted Solutions
Opus 17
Level 15

Can I claim pro-rated property tax paid with realtor credit?

You may claim the property tax that is paid on the property that covers your period of ownership, no matter how it is paid, even if not with your own funds.  

technically, this is treated as a reduction in the sale price. For example, if a negotiated contract price is $100,000, and you received a rebate from your real estate agent in the amount of $1000, then your purchase price is actually $99,000, and this is the figure you would use when reporting a capital gains transaction such as the sale of your home, or for calculating depreciation if you place the home in business business.  In this particular case, your real estate taxes were paid out of the agent‘s rebate, which is the same as paying it with your own funds. But in point of law, even if the seller had absorbed the cost, you are allowed to deduct the taxes as if you had paid them, and that absorbed cost would have been treated as an adjustment to the purchase price.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

4 Replies
Opus 17
Level 15

Can I claim pro-rated property tax paid with realtor credit?

Yes, you can claim the taxes from the date of your purchase to the end of the tax year.  They are usually an adjustment to the seller on your closing statement.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Mr-B
Level 3

Can I claim pro-rated property tax paid with realtor credit?

Thanks, Can you please reply to my corrected question?. For some reason TT did not post the full details, corrected it now.

Opus 17
Level 15

Can I claim pro-rated property tax paid with realtor credit?

You may claim the property tax that is paid on the property that covers your period of ownership, no matter how it is paid, even if not with your own funds.  

technically, this is treated as a reduction in the sale price. For example, if a negotiated contract price is $100,000, and you received a rebate from your real estate agent in the amount of $1000, then your purchase price is actually $99,000, and this is the figure you would use when reporting a capital gains transaction such as the sale of your home, or for calculating depreciation if you place the home in business business.  In this particular case, your real estate taxes were paid out of the agent‘s rebate, which is the same as paying it with your own funds. But in point of law, even if the seller had absorbed the cost, you are allowed to deduct the taxes as if you had paid them, and that absorbed cost would have been treated as an adjustment to the purchase price.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

Mr-B
Level 3

Can I claim pro-rated property tax paid with realtor credit?

Thank you!

Dynamic AdsDynamic Ads
v
Privacy Settings