Property Tax Deduction when selling a home

[sdwallace]

I sold my home in June 2017.  I got a year end statement from my lender showing mortgage closed and it also reported property taxes paid.  Lets make this example easy and pretend the lender statement said $2000 property taxes paid.  On my ALTA settlement statement, as the seller I was credited some taxes.  Let's call that summed to $1,500.  Since my lender is reporting what was actually paid out of escrow, I am assuming that I can only deduct $500 when I itemize and not the full $2000?

[DianeW]

The amount on the settlement statement at sale is the amount of property tax deduction you are entitled to on the home you sold.  At settlement the taxes are prorated for the year between buyer and seller based on months of ownership.  Do not use the lender statement in the year of sale.

[sdwallace]

Thanks for the quick response!  I have a question though as this was not the answer I was expecting.  Are you saying I should deduct the $1500?  The reason this does not make sense to me is I was actually credited that amount (the borrower paid me)?

[DianeW]

@sdwallace  If the $1,500 is in your column on the settlement statement as property tax (not escrow repayment) this is the amount you deduct. It should be clearly documented as to the prorated share of taxes for each of you.  And since it was June, the figure for the buyer should be a bit higher than your figure or about equal, depending on the day of the month for settlement.

[mhertel]

I have a similar situation, however we live in Indiana we pay property taxes in arrears. WE sold our home in May 2019. our lender paid (through escrow) taxes for Spring 18/19 (this is spoken Spring 18 pay 19 meaning we pay 2018 taxes in 2019). we then paid at closing per our ALTA sheet Fall 18/19 and a proration for Spring 19/20 since we sold in May. Our 1098 form the mortgage lender only shows the amount they paid on our behalf for the Spring 18/19. So can we claim both the amount paid by our lender and the 18/19 and the 19/20 proration on our ALTA sheet?

[MinhT]

Yes, in your case, you can deduct both the amount paid by your lender on your behalf AND the amount you were charged on your ALTA sheet. @mhertel