Archive for February, 2012

Watch your tax deductions

February 8, 2012

Starting in 2013, taxpayers will have to comply with a law that prevents property owners from deducting some property taxes on their income tax returns.

Federal and state laws generally limit the real estate deduction to ad valorem taxes, which are calculated as a percentage of the property’s assessed value. Any tax that is a flat amount per property or benefits a specific property is generally not deductible. There are some minor exceptions, however, and property tax statements do not spell out which charges are not deductible.

Until this year, almost everyone, including tax preparers, ignored this law and deducted 100 percent of property taxes.

Interesting to see the FTB choose a property tax statement from Alameda to illustrate the deductible and non-deductible taxes :)


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