Joshua and Mary Sullivan Purchased a New Home on October

question 13

Short Answer

Joshua and Mary Sullivan purchased a new home on October 1 of year 1 for $400,000. At the time of the purchase, it was estimated that the real property tax rate for the year would be 1 percent of the property's value. Because the taxing jurisdiction collects taxes on a July 1 year-end, it was estimated that the Sullivans would be required to pay $3,000 in property taxes for the property tax year relating to October through June of year 2 ($400,000 × 1% × 9/12). The seller would be required to pay the $1,000 for July through September of year 1. Along with their monthly payment of principal and interest, the Sullivans paid $333 a month to the mortgage company to cover the property taxes. The mortgage company placed the money in escrow and used the funds in the escrow account to pay the property tax bill in July of year 2. The Sullivans' itemized deductions exceed the standard deduction before considering property taxes. What amount are the Sullivans allowed to deduct for property taxes relating to the property in year 1 (ending July 1, year 1) and year 2 (ending July 1, year 2)?

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Definitions:

Basal Ganglia

Groups of neurons located deep within the cerebral hemispheres involved in the coordination of movement and reward processing.

Explicit Memories

Memories of specific information or events that can be consciously recalled.

Hippocampus

A critical part of the brain located in the medial temporal lobe, important for learning and memory.

Semantic Processing

Semantic processing is the cognitive process involved in the understanding and interpretation of language, including words, sentences, and meaning.