Odd little situation I'm in, as a Realtor have a contract with 12/29 proposed settlement. Buyer is very adamant we settle in 2017 b/c she will itemize 2017 but thinks next year due to tax bill she will take standard deductions so she wants to use her closing costs on 2017 return.

The seller, is flipping the house, and seems to want to settle in 2018. I believe it's because his flip is through an LLC which will get a new lower rate. Say he's making $50-80k that could mean a big chunk in savings.

So, I was thinking if we settle 12/29/17 but the seller takes a check instead of a wire and cashes it first business day of 2018 wouldn't that taxable income still be paid for 2018 tax year just as if it had settled in January?

I think I asked this question a long time ago about a similar situation where I was selling a property last day of a year but received my money the next year and I was told when the money was deposited in my account was when I had to pay taxes? Maybe I don't remember correctly.

  • Is the seller's LLC operating on cash basis or on accrual basis? Probably cash basis, but it may be relevant here if not. In any event, "constructive receipt" is the term to search for. – Joe Dec 20 '17 at 23:34
  • Would putting it in escrow over the year-end weekend help? – Rupert Morrish Dec 20 '17 at 23:38
  • So I was reading about constructive receipt, it seems if the buyer were to send the title company her closing funds in December and then the property settles in January, she could still deduct the closing costs in 2017.. is that correct? – user2156473 Dec 21 '17 at 3:50

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