IRS admits non-ad valorem *real* property taxes are deductible


R

Rich Carreiro

The CA FTB has been trying to ding people for deducting
non-ad valorem real property taxes, since CA conforms
to IRC 164(a). The FTB finally asked the Chief Counsel
for a letter on this and the CC had to admit that the IRC
does *not* require real property taxes to be ad valorem
to be deductible (though the IRC does require that of
personal property taxes).

The CC also said that revisions to Sched A, etc. instructions
will be recommended.

http://www.irs.gov/pub/irs-wd/12-0018.pdf

And the FTB letter that prompted this:
https://www.ftb.ca.gov/individuals/Real_Estate_Tax_Deduction/120811.pdf
 
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P

Pico Rico

Rich Carreiro said:
The CA FTB has been trying to ding people for deducting
non-ad valorem real property taxes, since CA conforms
to IRC 164(a). The FTB finally asked the Chief Counsel
for a letter on this and the CC had to admit that the IRC
does *not* require real property taxes to be ad valorem
to be deductible (though the IRC does require that of
personal property taxes).

The CC also said that revisions to Sched A, etc. instructions
will be recommended.

http://www.irs.gov/pub/irs-wd/12-0018.pdf

And the FTB letter that prompted this:
https://www.ftb.ca.gov/individuals/Real_Estate_Tax_Deduction/120811.pdf

yes, and MTM had this all figured out months ago!
 
R

removeps-groups

The CA FTB has been trying to ding people for deducting
non-ad valorem real property taxes, since CA conforms
to IRC 164(a). The FTB finally asked the Chief Counsel
for a letter on this and the CC had to admit that the IRC
does *not* require real property taxes to be ad valorem
to be deductible (though the IRC does require that of
personal property taxes).

The CC also said that revisions to Sched A, etc. instructions
will be recommended.
That's fair enough, but it is possible that FTB does not have to conform to federal law on this. That is, Schedule 540-CA may have an adjustment to itemized deductions, reflecting the fact that federal does allow ad volorem taxes but CA does not.
 
B

Bill Brown

The CA FTB has been trying to ding people for deducting
non-ad valorem real property taxes, since CA conforms
to IRC 164(a).  The FTB finally asked the Chief Counsel
for a letter on this and the CC had to admit that the IRC
does *not* require real property taxes to be ad valorem
to be deductible (though the IRC does require that of
personal property taxes).

The CC also said that revisions to Sched A, etc. instructions
will be recommended.

http://www.irs.gov/pub/irs-wd/12-0018.pdf

And the FTB letter that prompted this:
 https://www.ftb.ca.gov/individuals/Real_Estate_Tax_Deduction/120811.pdf
Interesting and useful, Rich. Thanks.
 
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A

Alan

That's fair enough, but it is possible that FTB does not have to conform to federal law on this. That is, Schedule 540-CA may have an adjustment to itemized deductions, reflecting the fact that federal does allow ad volorem taxes but CA does not.
The CA FTB has already published the fact that CA conforms to federal
law on the deduction of real estate taxes.
 

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