How do you handle prior year property tax deductions for a new construction?
(numbers are rounded for simplicity)
I purchased a home June 20th of 2016. At the time the home was being assessed at $1,300 - as the county had not yet reassessed the home since construction had been completed. The title company split the estimated real estate taxes based on ownership, with the seller crediting my closing statement $600 for their costs and an amendment that we would recalculate the property tax split in 2017. Fast forward to 2017 and the actual property tax bill has come in at $8,430, and the title company calculated that the seller owes $3,300 in prior year taxes.
I'm assuming that when 2017 taxes are due, I'll be required to claim a deduction of $4,530 (Full 8,430 less 600 paid in 2016, less 3,300 paid now). Is that correct?
To complicate the matter, the seller is refusing to pay and has offered a fractional amount. If we agree to take, for instance, $2,000, for full payment does this impact our deduction? I.e. Is my deduction $5,830 since I had to pay a fraction of his costs, or am I still limited to $4,530 because I didn't "own" the house during the time those taxes were accrued?