Can I add the county taxes on my closing to the property taxes paid from escrow?

[klann]

I sold my home in October 2015.  $5790.25 was included in the closing as county taxes.  However, my property tax bill of $7068.36 was paid from escrow in June and Sept.  Do I get to add both of them together for my property tax deduction?

[SusanH · Accepted solution]

You can deduct property taxes only for the time that you owned the property and in the year that they were paid.

Since states handle the property taxes differently, here are the general guidelines for you to apply to your situation.

For taxes paid at closing -  The amount you see may actually be moving the amount of property taxes from your side of the closing statement to the buyers side of the closing statement in order to give them credit for taxes they will have to pay at a later date but that were actually attributed to a time when you owned the property. If the taxes were actually removed from your proceeds and paid to the county, you can deduct them. You cannot deduct any portion paid for a period of time that you did not own the property. For example, if the amount paid at closing included November and December, you would have to prorate the amount paid at closing and could not deduct the portion of taxes paid for those months.

For taxes paid during the year - If the taxes were actually paid versus money dropped into your escrow account, you can deduct them. 

To recap - In your example, you may or may not be able to deduct part of the amount paid at closing (see above) but would be able to deduct the two payments made during 2015 from your escrow account. 

[billjz1]

If the seller (myself) gets a credit from the buyer for taxes I paid in advance,  but reflect the time period after the closing that the buyer owns the property, I understand that I need to reduce my property tax deduction.  WHERE DO I ENTER THIS AMOUNT???  It is a negative value that needs to be entered in the property tax section, but the software requires a positive amount.  IS THIS A BUG or is there another area that I need to enter the credit.