Can I claim pro-rated property tax paid with realtor credit?

[Mr-B]

Hi,

I purchased a house in May. Since seller already has paid property tax for May & June, seller got credit for that in closing. That credit was added as part of my closing cost.  All my closing cost were paid with realtor credit. (Realtor gave credit from his commission money and took reduced commission).

Provided that, can I claim this pro-rated property tax for 'May & June' in my Federal & California tax filings though it was paid with realtor credit?

[Opus 17]

Yes, you can claim the taxes from the date of your purchase to the end of the tax year.  They are usually an adjustment to the seller on your closing statement.

[Mr-B]

Thanks, Can you please reply to my corrected question?. For some reason TT did not post the full details, corrected it now.

[Opus 17]

You may claim the property tax that is paid on the property that covers your period of ownership, no matter how it is paid, even if not with your own funds.  

technically, this is treated as a reduction in the sale price. For example, if a negotiated contract price is $100,000, and you received a rebate from your real estate agent in the amount of $1000, then your purchase price is actually $99,000, and this is the figure you would use when reporting a capital gains transaction such as the sale of your home, or for calculating depreciation if you place the home in business business.  In this particular case, your real estate taxes were paid out of the agent‘s rebate, which is the same as paying it with your own funds. But in point of law, even if the seller had absorbed the cost, you are allowed to deduct the taxes as if you had paid them, and that absorbed cost would have been treated as an adjustment to the purchase price.

[Mr-B]

Thank you!