Can I claim property (real estate) taxes if I recently bought or sold my home?
Yes, your share of these taxes can be claimed if you itemize your deductions. Property (real estate) taxes are generally divided between the buyer and seller so each pays taxes for the part of the year they own the home.
You can claim any property (real estate) tax you were charged in your closing costs. Look for a "real estate tax", "property tax" or “county taxes” charge on your HUD-1 settlement statement.
If you made payments into an escrow account, you can only deduct the amount actually paid by your lender to the taxing authority on your behalf during the year.
Be sure to claim the deduction in the year you (or your lender, on your behalf) made the payment. So if you paid your 2017 property tax on December 14, 2016, claim it on your 2016 return.
You can claim property (real estate) tax you already paid for the calendar year, minus any amount allocated to the buyer. It doesn’t matter if you were reimbursed for the buyer’s share at the close of escrow or not—you can only claim your share of the property (real estate) tax for the time you owned the home.
Here are two ways to see what you were reimbursed:
- It's in Box 5 of Form 1099-S
- Look for "property tax", "real estate tax" or “county taxes” your HUD-1 settlement statement
Marlene sold her home to John, and it closed on November 15, 2016. The property tax bill is $6,000 per property tax year, which runs July 1, 2016 – June 30, 2017. Marlene made the first payment of $3,000 to cover the July 1 – December 31, 2016. The monthly property tax amount is $500 ($3,000 divided by 6 months).
John claims $750 on his taxes for half of November and all of December. He reimbursed Marlene $750 through his closing costs and sees a pro-rated reimbursement of $750 on the HUD-1 statement.
Marlene claims $2,250 on her taxes—her payment of $3,000 less John’s share of $750. She sees this amount in Box 5 of Form 1099-S as well as on the HUD-1 statement.