Taxable Items - Real Estate Mortgage Non-deductible

Real estate taxes.

Deductible, real estate taxes are state, local, or foreign taxes on real property. They are charged uniformly, against all property in the jurisdiction. These taxes are based on the assessed value.

Many states, and counties, impose local benefit taxes, for improvements to property. These include assessments for streets, sidewalks, and sewer lines. These taxes are not deductible. However, to cover the cost, increase the cost basis of your property, by the amount of the assessment.

For more information, Refer to IRS Publication 551, Basis of Assets. Local benefits taxes are deductible when used for maintenance or repair, or interest charges related to those benefits.

Mortgage payments.

Some have a monthly mortgage payment going to an escrow account. Periodically, a lender pays your real estate taxes from this account, to the local government. In this case, do not deduct the amount paid, into the escrow account. Only deduct the amount actually paid from the escrow account, during the year, to the taxing authority.

Personal property taxes.

Deductible personal property taxes are based only on the value, of personal property. Examples include a boat or car. The tax must be charged to you, on a yearly basis. It is irrelevant if it is collected more than once a year or less than once a year.

Non-deductible items.

There are taxes and fees, which are not deductible, on Schedule A. These include:

Federal income taxes,
sales taxes,
social security taxes,
stamp taxes,
transfer taxes on the sale of property,
homeowner's association fees,
estate and inheritance taxes, and,
service charges for water, sewer, or trash collection.

Typically, sales taxes are not deductible on Schedule A. However, if you elect to deduct them, you are unable to deduct state and local income taxes.

Tax Deductible Items (its)