I moved from IL to UT in 2017, but my IL home didn't sell until 2018 (at a loss). Can I deduct the loss & property taxes paid in FY2018 on my FY2018 tax return?

[Anon5]

The property in question in Illinois was my primary residence for 8 years.  It took 10 months on the market (from June 2017 to April 2018) to sell, and I could not reap any profit during the time the home remained vacant (my homeowner's association mandated owner occupation only, so no ability to rent it out for those 10 months).  In Illinois, we paid real estate tax for the previous year - i.e., the 2018 real estate tax bill covers FY2017.  So at closing in April 2018, I had to pay ~$2900 for FY2017 taxes billed in 2018 (since I owned the property all year), plus a prorated ~$750 in taxes for FY2018 that the new owners of the property won't be billed for until later in 2019.  Can I deduct these real estate tax payments from my FY2018 tax return?  Of note, I did not earn any income in the state of Illinois in 2018, and the mortgage was fully paid off at the time I put it up for sale in June 2017 so I did not need to deduct mortgage interest.

I also sold the property in 2018 at a loss of what I paid for it in 2009 (not a huge loss - just a few thousand dollars).  Is there deduction I can take for that?

Possibly complicating matters is that in 2017, I moved to Utah for work and bought a new home here, on which I deduct my mortgage interest and Utah real estate taxes from my tax return.

[TomD8 · Accepted solution]

Unfortunately, you cannot deduct a loss on the sale of your personal residence.

You are responsible for, and can deduct, the real estate taxes on your Illinois home that cover the time up to, but not including, the closing date of its sale.  These are deductible by you even if the actual bill was paid by the new owners (due to the fact that Illinois property taxes are billed in arrears).

[Anon5]

Thank you TomD8!  To do this, would I file an Illinois state return (in addition to the Utah state return I will be filing) and claim a deduction for property taxes I paid (for both FY2017 and FY2018, all at once, since that's what I paid at closing last April)?  Would Illinois even give me a refund for this if I didn't earn any Illinois income in FY2018?

[TomD8]

Illinois doesn't give a refund for property taxes - it gives a credit of 5% (of the property taxes paid) off your Illinois taxes due.  If you did not live in, or have earnings from, Illinois in 2018, you would have no Illinois taxes due, thus no basis for the property tax credit and no need to file an Illinois tax return.
If you itemize, you can deduct your portion of the 2018 property tax on your federal return.

[Anon5]

Thank you Tom - that's really helpful to know!  It's too bad I can't get refunded, but it definitely simplifies my tax filing situation for FY2018 and makes my return a lot less daunting! 🙂