Back taxes on investment RE

[txyank]

A new client came in today who sold investment real estate in 2007 which he purchased in 2001. There were back taxes owed on this property which he paid off over several years,but never claimed on schedule A. Can these taxes be added to basis now,even though paid in previous years? He got two different answers before coming to me,so I want to be sure. The taxes paid are quite substantial and will cause a loss on Schedule D.

I appreciate any help at this busy time. Thank you

Sunday

[txyank]

Can someone give me a hint to point me in the right direction,please?

I have read pub550,checked in TAXBOOK and Kleinrock Quick answers but still not sure.I hope my question was clear.I am blurry around the edges.Thanks for any input.

[LindaB]

This is from Pub. 551, Basis of Assets:

under 'Deducting vs. Capitalizing Costs'

"...you can choose either to deduct or to capitalize certain other costs. If you capitalize these costs, include them in your basis. If you deduct them, do not include them in your basis (See Uniform Capitalization Rules, earlier.)

The costs you can choose to deduct or to capitalize include the following.

Carrying charges, such as interest and taxes, that you pay to own property, ..."

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This might give you another place to look. I remember a discussion about this in the past, maybe someone who knows for sure will post.

[txyank]

This is from Pub. 551, Basis of Assets:

under 'Deducting vs. Capitalizing Costs'

Linda.thanks so much. Pub. 551 was the one I was searching for.I found this statement which seems to fit my situation.

Real estate taxes.<A class=indexterm name=d0e317> 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...