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Credit cash $750

Line 211 on the HUD 1 is an "adjustment for items unpaid by seller". The adjustment Nike Windrunner Fleece Mix is the seller reimbursement from his proceeds of the sale.

amount reduce the cost basis for the property for depreciation? Does this effect how I report property taxes paid on Schedule E?

Yes, I understand it properly now. I was confused by the change between the accrual and cash methods for reporting. For most of my rental business taxes I report income and expenses under the cash method, but I have to adjust for these taxes to the accrual method. I believe the other thing that would require the use of the Nike Windrunner Gx1 White

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Buyer Schedule E deduction for property taxes is $250 ($500 buyer paid minus $250 reimbursement from seller).

Schedule E would be affected in that the amount reimbursed by the seller reduces the allowed Schedule E deduction. Since the taxes were reimbursed by seller, the buyer cost basis is not affected.

accrual method would be prepaid insurance premiums or other expenses which are not used up within 12 months.

Accrued Property Taxes Effect on Cost Basis

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How should this amount be treated for income tax purposes? Would the Nike Coat Boys

If the seller, however, reimbursed you, then this changes Steven answer. From the wording of your question, I get the sense that you either got or are expecting a credit on the HUD 1 for the property taxes attributed to the seller period of ownership. You will pay the full tax bill for the year when it comes due. In this case, your Schedule E property tax deduction will be the amount of the tax bill minus the amount the seller reimbursed you on the HUD 1. Your basis in the property is not adjusted.

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Originally posted by Kyle Meyers:Line 211 is for taxes unpaid by seller being credited to buyer. As per Steven explanation above, schedule E would not be effected, but the basis would be increased.

Debit new property basis $12,000

Purchase price is $10K. Seller reimbursed buyer $250 for 1/2 year of accrued property taxes. At end of tax year, buyer pays property tax bill of $500 for the full tax year. Buyer placed property in service as rental immediately after closing.

Buyer cost basis is $10K.

If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. You cannot deduct them as taxes, just as Steven told you.

Steven, when you say the property taxes at closing will not go on schedule E, you mean they will not be listed there, but they will effect it later correct? So as Dave says, the amount on schedule E will be less because I will not be incurring the expense, but rather paying off the liability I assumed at closing.

Would these journal entries accurately represent what is happening?

Debit AP Property Taxes $750

Credit cash $750

1 for accrued property taxes for the time the seller has owned the property, but which are not due to the county yet.

When purchasing a rental property, it has been standard for me to receive a credit on the HUD Nike Long Sleeve Cotton

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I have my accounts payable added to my chart of accounts for my accounting now and I can properly account for these property taxes using the mix between the cash method and accrual method.

Credit cash $11,000

Debit AP Property Taxes $250

I am sure this is a pretty basic question with a straight forward answer, but I have thought about it too much and gotten myself confused by my own thoughts.

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Debit Property Tax Exp (sched. e) $500

It is not clear from your question whether the seller reimbursed you for the prorated property taxes. Maybe this is a hypothetical question and not referring to a specific property settlement.

Credit AP Property Taxes $1,000

Nike Windrunner Fleece Mix

Nike Windrunner Fleece Mix

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