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I co-own some rental property. My co-owner collected rent, paid expenses, and eventually (he was very busy) filled out IRS tax forms and told me what I would have received as income.

He recently died, and it turns out he hasn't paid property taxes for a few years.

I would like to know, if I pay 2018 through 2020 property, school, trash, etc. taxes this year, should I list them as expenses on this year's Schedule E, or must I list them on the forms for the years the taxes and fees were incurred?

The Schedule E instructions don't mention anything about this.

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In general if you paid the expense in calendar year 2020 then it should appear on the 2020 tax forms you will file in the spring of 2021. There are some bills that have to be prorated for example insurance if the policy term doesn't align with the calendar year.

But you have one very important thing that has to be addressed: what happened in the previous years. You thought that these bills were paid. Does that mean that he claimed the expense on the tax forms even though the bill wasn't paid? Did the numbers you included on your tax forms reflect reality or just his version of reality?

That could mean that you will need to correct the earlier tax forms. You should sit down with a tax expert and go over the books and the tax forms.

Based on the comment that you don't have any tax forms since 2012, you might want to start with the tax expert to see what documentation you can get from the estate and the IRS.

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  • The most recent tax forms he gave me were for 2012. I don't expect to be granted access to any of his financial records, but if I do I'll certainly have a tax attorney look things over. – Dev1 Oct 12 at 20:43

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