Sounds like you bought a house, with taxes paid up for the quarter already and you took possession sometime during the quarter. it also sounds like they forgot to calculate the tax credit due to the seller at closing. if that's the case, I believe most purchase contracts have a clause that states you will make it right if there was some miscalculation or simple omission at closing. even if not, the old owner paid for taxes and you are benefitting unjustly. the ethical thing in my mind is to refund the extra tax. there is no reason to go to court for this.if i'm wrong, please explain the situation better.

If you want to be ethical - don't market using potential rehab costs. 

It's not rocket science but does take some sacrificing, patience, work ethic, and ambition.

Another aspect is ethics, if you are not confident enough in the deal to put $1000 at risk, then maybe you shouldn't be doing the deal. 

Unless the buyer try to negotiate with seller, seller take home 5k more, and the buyer pay 5k less, cut out the middle man.This is not ethical and you have a contract with seller to prevent this from happening, right?

TITLE 74  TRANSPARENT AND ETHICAL GOVERNMENTCHAPTER 1 PUBLIC RECORDS ACT74-120.

@Mark Creason has a lot of valuable insight to offer about the ethics and legalities in that biz.  

These are professionals with additional training and a stricter code of ethics.

I got a good work ethic, and am very eager to learn the business.

I have no issues with ethical wholesalers.