Can I deduct these Real Estate taxes on overseas rental property ?

[mdd108]

I inherited a rental property overseas.   There were $17350 outstanding property taxes from 2009 to 2013 including fines for late payment.  It was a tax on second properties and was not tax deductible in the  foreign country.   It was only payable because I sold the property.   I had to provide proof of payment before the sale could be completed.H ad I waited 3 more year I would have not been required to pay due to a government amnesty.   Am I able to include on my tax return for IRS under real estate taxes or sale expenses?

[JulieS]

No, foreign real estate taxes are not deductible as part of your itemized deductions. Click here to see applicable rules. 

You can include the amount paid as part of your basis when you report the sale of the property on your US tax return. Click here to learn more. 

[mdd108]

@JulieS  thanks I though foreign real estate taxes on rental properties was allowed. Could you clarify for me.

With regard to reporting these taxes - what does part of your basis mean - Do I  add the cost to the value of house at the time of selling or subtract from the  sale price?

[JulieS]

Yes, that is correct, your foreign real estate taxes are not deductible on Schedule A.  You can include them as part of your basis. 

When you sell a property, the gain is calculated by subtracting your basis (normally your purchase price) from the selling price. If the selling price is more, you have a gain. 

Because you inherited this property, your basis is the fair market value (FMV) at the time of the original owner's death plus any adjustments to your basis. You are allowed to add the taxes that you paid to your basis. 

[mdd108]

Great - thank you so much.