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Posted by Phil Marti on February 1, 2008, 2:58 pm
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"Phil Sandler" wrote:
>> This sounds strange. I've never seen a condominium project that could be
>> sold before it had been platted and each unit assigned its own real
>> estate
>> tax designation.
>
> Apparently this is common in Cook County (Chicago). Three of the four
> units closed in 2006, and individual PINs for the units did not become
> active until 2007 (taxes are paid in arrears in Chicago--I have no
> idea if this is the case everywhere).
Aha! The plot congeals. Good old Illinois property taxes paid in arrears.
I've been told it was a one-time gimmick in the Depression that they never
got around to repealing. If not unique to Illinois, it's extremely rare
elsewhere.
If you closed in 2006 you can deduct the property taxes from your date of
closing through the end of the year. This would have been paid in 2007.
Owners who bought in 2007 have not yet paid any deductible taxes.
Assuming you closed in 2006, you were given a credit for 2006 property taxes
accrued by the seller which you would have to pay in 2007. As you note, you
cannot deduct that amount.
You can deduct on your 2007 return the 2006 taxes attributable to your 2006
ownership which you paid in 2007.
> Again, we just got two tax bills for the whole building, which was
> paid by the association. We only have the paid bill and the cancelled
> check (and I guess the allocation of ownership for each unit).
Just to make sure, you're talking about 2006 taxes, billed to and paid by
the association in 2007, and you closed on your purchase sometime in 2006.
Now, one more question. How did the 2006 bill, paid in 2007 by the
association, get paid? IOW, where did the money come from?
--
Phil Marti
Clarksburg, MD
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Posted by Phil Sandler on February 3, 2008, 4:57 pm
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> Just to make sure, you're talking about 2006 taxes, billed to and paid by
> the association in 2007, and you closed on your purchase sometime in 2006.
Yep.
> Now, one more question. How did the 2006 bill, paid in 2007 by the
> association, get paid? IOW, where did the money come from?
It got paid for out the association's funds. The source of these
funds included monthly payments from each unit, plus the deposits made
at closing, plus (to a smaller degree) a special assessment we made
when we got the tax bill.
Thanks again,
Phil
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Phil Marti on February 4, 2008, 9:05 am
Please log in for more thread options "Phil Sandler" wrote:
>> Now, one more question. How did the 2006 bill, paid in 2007 by the
>> association, get paid? IOW, where did the money come from?
>
> It got paid for out the association's funds. The source of these
> funds included monthly payments from each unit, plus the deposits made
> at closing, plus (to a smaller degree) a special assessment we made
> when we got the tax bill.
Then I'd treat it the same as a coop.
--
Phil Marti
Clarksburg, MD
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by Paul Thomas, CPA on February 1, 2008, 3:02 pm
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>> Property tax is often paid mid-year, for that year. As such, if you
>> bought
>> after the tax payment, you would (or should) see an adjustment for
>> property
>> taxes paid in advance by the seller on your closing statement (generally
>> a
>> HUD-1). That amount is what you get to deduct.
>
> I'm not sure I'm clear on this. The amount of 2006 tax deposit the
> seller paid at closing is the amount I can deduct?
Nope. The amount you reimbursed the seller for. It should have added to
your purchase price. Look at the HUD-1.
But, you said that taxes are paid in arears in Chicago, so the amount you
paid in 2007 was for 2006, when you didn't own the condo (which happens
also). So the HUD-1 sould have decreased the amount to the seller by the
unpaid taxes, and decreased the amount you needed at closing, so you get to
deduct the taxes you paid during the year, less the tax adjustment for the
sellers unpaid taxes.
> Again, we just got two tax bills for the whole building, which was
> paid by the association. We only have the paid bill and the cancelled
> check (and I guess the allocation of ownership for each unit).
>
> In general, it seems to me that if real estate taxes are paid,
> *someone* should logically get to take a deduction somewhere. Maybe
> that's naivety on my part. :)
>
> Thanks again for your thoughtful responses. Any additional insight
> would be appreciated.
I'd take your percentage of the tax paid by the association, then make the
math adjustment (maybe an increase, maybe a decrease) for the
taxes-paid-in-advance (+) or the unpaid taxes (-) of the seller.
--
Paul A. Thomas, CPA
Athens, Georgia
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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