Schedule A Real Estate Taxes Paid

[eddiebaker50]

I forgot. Can a taxpayer deduct taxes paid on investment property here? Or just on primary residence. thanks

 

[JoeTaxpayer]

I forgot. Can a taxpayer deduct taxes paid on investment property here? Or just on primary residence. thanks

The rental income and expenses all flow through Schedule E. This hits
your 1040 separate from Schedule A.

 

[eddiebaker50]

I know. You are right. But I am talking about investment property real estate taxes not rental.

 

[JoeTaxpayer]

I know. You are right. But I am talking about investment property real estate taxes not rental.

Sometimes a longer explanation helps. You have a piece of real estate
you hold for investment. It's not rented. A vacant building? Land? A few
details, and someone will give you a decent answer.

 

[Don Priebe]

I forgot. Can a taxpayer deduct taxes paid on investment property
here? Or just on primary residence. thanks

Yes, you can deduct the property tax on Schedule A. You're thinking of
the restriction on mortgage interest which applies to your primary or
secondary home. (Actually interest on investment property could go on
Schedule A also, just not on the line you're thinking of.)

Don EA in Upstate NY

 

[remove ps]

I forgot. Can a taxpayer deduct taxes paid on investment property
here? Or just on primary residence. thanks

You can deduct an unlimited amount of property tax on your Schedule A.
However, if you are in AMT then you get no benefit for your deduction
and it might be better to make an IRC 266 election to add the property
tax to your cost basis.

 

[Pico Rico]

You can deduct an unlimited amount of property tax on your Schedule A.
However, if you are in AMT then you get no benefit for your deduction
and it might be better to make an IRC 266 election to add the property
tax to your cost basis.

does IRC 266 permit this for developed real estate? I do not see that.

 

[remove ps]

does IRC 266 permit this for developed real estate? I do not see
that.

BEGIN QUOTE
http://www.taxalmanac.org/index.php/Treasury_Regulations,_Subchapter_A,_Sec._1.266-1

(ii) In the case of real property, whether improved or unimproved and
whether productive or unproductive:

(a) Interest on a loan (but not theoretical interest of a taxpayer
using his own funds),

(b) Taxes of the owner of such real property measured by compensation
paid to his employees,

(c) Taxes of such owner imposed on the purchase of materials, or on the
storage, use, or other consumption of materials, and

(d) Other necessary expenditures, paid or incurred for the development
of the real property or for the construction of an improvement or
additional improvement to such real property, up to the time the
development or construction work has been completed. The development or
construction work with respect to which such items are incurred may
relate to unimproved and unproductive real estate whether the
construction work will make the property productive of income subject
to tax (as in the case of a factory) or not (as in the case of a
personal residence), or may relate to property already improved or
productive (as in the case of a plant addition or improvement, such as
the construction of another floor on a factory or the installation of
insulation therein).

END QUOTE

 

[Pico Rico]

BEGIN QUOTE
http://www.taxalmanac.org/index.php/Treasury_Regulations,_Subchapter_A,_Sec._1.266-1

(ii) In the case of real property, whether improved or unimproved and
whether productive or unproductive:

(a) Interest on a loan (but not theoretical interest of a taxpayer
using his own funds),

(b) Taxes of the owner of such real property measured by compensation
paid to his employees,

(c) Taxes of such owner imposed on the purchase of materials, or on the
storage, use, or other consumption of materials, and

(d) Other necessary expenditures, paid or incurred for the development
of the real property or for the construction of an improvement or
additional improvement to such real property, up to the time the
development or construction work has been completed. The development or
construction work with respect to which such items are incurred may
relate to unimproved and unproductive real estate whether the
construction work will make the property productive of income subject
to tax (as in the case of a factory) or not (as in the case of a
personal residence), or may relate to property already improved or
productive (as in the case of a plant addition or improvement, such as
the construction of another floor on a factory or the installation of
insulation therein).

END QUOTE

yes, I saw that. So, the answer is no.

 

[remove ps]

yes, I saw that. So, the answer is no.

I'm not following. Looks like the rules allow for IRC 266 on improved
real property, which means developed real estate.

 

[Pico Rico]

I'm not following. Looks like the rules allow for IRC 266 on improved
real property, which means developed real estate.

yes, but WHAT does it allow?