☰
✕
Sign In

Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted Jun 4, 2019 1:02:31 PM

How to report credit that I got from seller for unpaid property taxes?

I purchased a rental property in 2017. The seller gave me credit for unpaid property taxes at closing (included in the closing document...Let say $1000)...I didn't have the pay the 2017 property taxes till early 2018. Let say that I paid in Jan 2018 $3000 for 2017 property  taxes ($1000 of that was credit from the seller for unpaid taxes)

 How do I report the amount that the seller  credited me for unpaid property taxes in my 2017 LLC report? Do I deduct $1000  from the basis of the cost? Or is it considered  $1000 income in 2017? Or, do I deduct it from my tax expense in 2018 tax report and expense only $2000 in taxes when I submit my 2018 taxes in 2019?

Thanks!

0 1 971
1 Replies
Expert Alumni
Jun 4, 2019 1:02:32 PM

No, you would not deduct the $1,000 from the basis of the property. The $1,000 is not considered income to you in 2017. You would deduct the $1,000 from your expense when you pay the taxes in 2018 so you would only expense $2,000 in 2018.

https://www.irs.gov/pub/irs-pdf/p527.pdf