Feb 13 2012

Update on Tax Deductibility of Piedmont Parcel Taxes

Legislator puts forward a proposal to ensure some parcel taxes will be tax deductible on State returns

Update:  On April 13, 2012 the FTB has reversed its position.  Its guidance for taxpayers webpage limiting the real property tax deduction, generally, to ad velorem taxes has been taken down and new guidance will be coming.  The FTB’s back-tracking on its position may permit the deduction of Piedmont school parcel taxes, which average $3,000 per parcel, for the tax year 2011.  Check with your tax advisor.  PCA Article coming soon. 

State Assemblyman Jim Silva, R-Huntington Beach (Orange County) recently introduced a bill that would designate Mello-Roos fees as tax deductible on California State tax returns.  If passed, AB1552 would be effective for tax years starting Jan. 1, 2012.  (It would not change tax deductibility for prior tax years.)

The Franchise Tax Board (FTB) plans to add 3 new lines to state tax returns designed to distinguish deductible from non-deductible property taxes.  The FTB is now advising taxpayers:

“Beginning with your 2012 California tax return, the reporting requirements for real estate tax deductions will change. This will include reporting your property parcel number, deductible, and nondeductible amounts. Keep a copy of your property tax bill(s) to report this information on your return.”

For further details on tax deductibility, see the PCA article on the deductibility of the sewer surcharge and other Piedmont parcel taxes.



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