real estate tax in closing costs

[schirallicpa]

Client owns a rental property and refinanced a mortgage.  The client had not paid 2021 or 2022 real estate taxes and those taxes were  included in the closing costs.  Since he already owns the property, I think these should be expensed, not capitalized and certainly not part of the amortizable closing costs.  However, the client wants to show a profitable tax return.  So I'm kinda thinking about this too much.  

[Lee B]

If it was my client I would expense the property taxes in the tax year in which the property taxes were paid via the mortgage closing.

One year clients complain that their taxes are too high, the next year they want to show more income.

[Gail in Virginia]

1 hour ago, cbslee said:

 

One year clients complain that their taxes are too high, the next year they want to show more income.

I think it is the same year - they want to show that they made millions and yet they want to pay -0- in income tax.  They are convinced that is what rich people do and if we were just "good" enough at our jobs to find them those same loopholes, they could make money without paying taxes.  

[mcb39]

It definitely is expensed in the year that it is paid.  There is even a line for it on the Schedule E.

[Abby Normal]

As I'm fond of saying, we account for what actually happened, not what someone hoped had happened.

There is zero basis for capitalizing past due real estate taxes in this situation.