On July 1 of 2013,Elaine purchased a new home for $400,000.At the time of the purchase,it was estimated that the property tax bill on the home for the year would be $8,000 ($400,000 × 2%) .On the settlement statement,Elaine was charged $4,000 for the year in property taxes and the seller was charged $4,000.On December 31,Elaine discovered that the real property taxes on the home for the year were actually $9,000.Elaine wrote a $9,000 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 2013?

Question

Quizplus · Accepted Answer

Elaine can only deduct the amount of real property taxes that she actually paid during the year. She paid $4,000 at settlement and an additional $9,000 later in the year, for a total of $13,000. However, she was only responsible for $8,000 ($400,000 x 2%) in property taxes for the year. Therefore, she can only deduct the actual amount she paid, which is $4,500 ($4,000 + $9,000 - $8,500 refund from seller).

On July 1 of 2013,Elaine Purchased a New Home for $400,000.At