https://www.irs.gov/publications/p17/ch22.html
Example 2.
George and Helen Brown bought a new
home on May 3, 2014. Their real property tax year for the new home is the
calendar year. Real estate taxes for 2013 were assessed in their state on
January 1, 2014. The taxes became due on May 31, 2014, and October 31, 2014.
The Browns agreed to pay all taxes
due after the date of purchase. Real estate taxes for 2013 were $680. They paid
$340 on May 31, 2014, and $340 on October 31, 2014. These taxes were for the
2013 real property tax year. The Browns
cannot deduct them since they did not own the property until 2014. Instead,
they must add $680 to the cost of their new home.
In January 2015, the Browns receive
their 2014 property tax statement for $752, which they will pay in 2015. The
Browns owned their new home during the 2014 real property tax year for 243 days
(May 3 to December 31). They will figure their 2015 deduction for taxes as
follows.
Worksheet
22-1.Figuring Your Real Estate Tax Deduction — Taxes on New Home
1. Enter the total real
estate taxes for the real property tax year $752
2. Enter the number of
days in the real property tax year that you owned the property 243
3. Divide line 2 by 365
(for leap years, divide line 2 by 366) 0.6658
4. Multiply line 1 by line
3. This is your deduction. Claim it on Schedule A (Form 1040), line 6 $501
The remaining $251 ($752 paid less
$501 deduction) of taxes paid in 2015, along with the $680 paid in 2014, is
added to the cost of their new home.
Because the taxes up to the date of
sale are considered paid by the seller on the date of sale, the seller is
entitled to a 2014 tax deduction of $931. This is the sum of the $680 for 2013
and the $251 for the 122 days the seller owned the home in 2014. The seller
must also include the $931 in the selling price when he or she figures the gain
or loss on the sale. The seller should contact the Browns in January 2015 to
find out how much real estate tax is due for 2014.
