Q: How are real estate taxes claimed as a deductible in regard to a sold inherited rental property?
Inherited rental commercial property sold in 2019. Its 2019 Rent income received prior to sale. Past due taxes in total, inclusive of 2019 taxes, were paid at closing. When filing 2019 Estate tax returns for 2019, which is also Final Return, should these real estate taxes be claimed as deductible against rental income received in 2019 or against 2019 Gross Sale amount? Long-Term Capital Gains need to be calculated at stepped-up value, but I thought calculation for capital gains for the beneficiaries on sale should not include the payment of real estate taxes. Also, some of the taxes paid at closing were for previous years. Is there an adjustment that needs to be made to apply taxes paid respective of their specific year, or does it just matter in which year the taxes were paid? Thank you.
A: Property taxes related to a business are deducted in the year paid.
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