"Phil Sandler" wrote:

- quote -

Then I'd treat it the same as a coop.
--
Phil Marti
Clarksburg, MD

--
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"Phil Marti" <prm20...[at]verizon.net> wrote:
- quote -

Yep.

- quote -

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

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"Phil Sandler" <psandler70[at]hotmail.com> wrote
- quote -


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.







- quote -




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. > << ------------------------------------------------------- >

"Phil Sandler" wrote:

- quote -

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.

- quote -

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

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

All,

Thanks to everyone for their responses. Comments inline:


"Phil Marti" <prm20...[at]verizon.net> wrote:
- quote -

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).

"Paul Thomas, CPA" <paulthomascp...[at]bellsouth.net> wrote:
- quote -

Yes, we received and paid one bill (two technically, as there are two
payments each year in Chicago).

- quote -

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? That seems counter-
intuitive to me; logically it would seem that the seller could deduct
that amount, while I would be able deduct the prorated amount for the
balance of the year.

To clarify with an example, let's say the total tax bill for the
building was $10,000, and each unit's share was exactly 25%. That
would mean each unit's ownership share would be $2500 of the tax bill
(theoretically, of course).

Now let's say we closed on April 1st, so we owned the property for 75%
of the year, and the seller owned it for 25% of the year. Let's
assume the seller correctly paid $625 as a tax deposit at closing.

We would then be able to deduct the $625, even though it was
technically not paid by us, and wasn't paid in the year 2007?

- quote -

No, the taxes were for the whole building, by the association. So it
sounds like what you are saying it we can't deduct our percentage.

- quote -

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.


Phil

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"Phil Sandler" <psandler70[at]hotmail.com> wrote
- quote -




As the land/building was owned by the association or the builder/developer,
one bill would have been presented to and due by that entity.

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.






- quote -


Were they paying for taxes that ~~~YOU~~~ legally owed?

You can't take a deduction for taxes you didn't owe.




- quote -




As far as proof, what document does the association have that they paid by?
Does it break down the tax by unit?




--
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. > << ------------------------------------------------------- >

"Phil Sandler" <psandler70[at]hotmail.com> wrote in message
news:3ab6cc0a-1ed0-483f-89f9-37d536b9bb62[at]v46g2000hsv.googlegroups.com...
- quote -


I believe this is the case. Pub 17 states this to be so for cooperatives,
so your first year in the condo is akin to this situation. Have the condo
association provide each member with a letter documenting their share of the
property taxes, and a copy of the total property tax bill. This
documentation need not be provided to the IRS, unless requested.

--
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"Phil Sandler" wrote:

- quote -

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.

See IRS Publication 530 for information about the time period for which you
can deduct taxes. Anything you pay that accrued before you owned is not
deductible by you and should have been accounted for (seller giving you
money to pay it) at closing.

- quote -

If it turns out that the association really did pay taxes for periods of
your ownership, see the section in the Pub on Cooperatives. While yours
isn't a coop, I'd apply the same principle. (I might also be wrong, but I'd
argue that it's the same.)

The legal package the developer recorded (here it's called a Public Offering
Statement) and you didn't read (check the back of the closet) should detail
your percentage of ownership, which could be applied to the taxes paid.

- quote -

It wouldn't, as there is no requirement to do so.

--
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. > << ------------------------------------------------------- >

All,

I have been Googling trying to find this information for days, but
with no luck.

I live in a new 4-unit building. Our real estate taxes for the
building were paid by the association through 2007, as we did not get
individual bills for our units until this year. Since we are a small
building, we run our own association and one of the owners acts as the
treasurer.

It seems to me that each unit should be able to deduct their
percentage of ownership of the building on their 2007 taxes.

Assuming this is the case:

1. Could someone point me toward something in the tax code that
indicates this is allowed?
2. How would the association furnish proof/documentation of this
payment (and each individual's share) to the IRS?

Thanks in advance for any info.

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. > << ------------------------------------------------------- >