On July 1 of year 1, Elaine purchased a new home for $585,000. At the time of th

Question

On July 1 of year 1, Elaine purchased a new home for $585,000. At the time of the purchase, it was estimated that the property tax bill on the home for the year would be $11,700 ( $585,000 × 2%) On the settlement statement, Elaine was charged $5,850 for the year in property taxes and the seller was charged $5,850. On December 31, year 1 Elaine discovered that the real property taxes on the home for the year were actually $12,700. Elaine wrote a $12,700 check to the local government to pay the taxes for that calendar year (Elaine was liable for the taxes because she owned the property when they became due). What amount of real property taxes is Elaine allowed to deduct for year 1?

$0.

$5,850.

$6,350.

$6,850.

$12,700.

Explanation / Answer

$ 6350 , Because $5850 + $500 { 50% * ($12700 -$11700) } , he paid after discovering that estate tax sholud be total of $12700,

Note:- Elaine cannot claim the property tax that he paid on behalf of seller (thats is additional $1000 [12700 - 11700] , that $1000 should be divided by as 1:1 for claiming as deduction by buyer and seller.

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.