Friday, January 20, 2012

Deducting Property Taxes

If you have real property, knowing the correct amount to deduct for your Schedule A has always been a challenge. Technically, the only portion of property taxes which can be currently deducted is the ad valorum tax, in other words, the tax assessed based on the assessed value. There are a few other items that may be deductible if the item is to maintain an existing public facility already in service, such as a sidewalk or water tank.

Most property tax bills are totally inadequate when it comes to breaking down the deductible amounts. Items on your tax bill such as Mello-Roos taxes and special assessments are required to be capitalized, just as a capital improvement made to your property. Basically, rather large portions of your tax bill may not be currently deductible. It isn't a matter of if, but when you may take the deduction.

With most states being broke, California especially, beginning this year, CA is considering a website where you can look up the deductible portion of your taxes. With that said and done, it is still possible that CA law may conflict with federal law. Beginning with the 2012 filing season, if deducting real property taxes, you will be required to enter both the street address and the assessor's parcel number right on the schedule A. Stay turned; further information should be forthcoming over the year.

1 comment:

  1. You’ve got some genuinely important information written here. Great job and keep posting good stuff.

    ReplyDelete