Real Estate Taxes

[solomon]

Home owner does not itemize on A. Can he increase basis in home upon sale with the unused real estate taxes?

[skhyatt]

Yes

Yes, see TTB, 4-14. Reg. Sec 1.266-1(b)

[Gary]

Interesting

This is very iinteresting, Something I didn't know but probably should have. Does this mean that, even though I don't plan to sell my home for 20 years, each tax return for the next 20 years would need a statement listing the expenses to be capitalized?

Gary

[skhyatt]

Me either

I wasn't aware of it either before reading that section in TTB. In reading the citation, I'm still having trouble seeing that it applies to a "homeowner". Anyone else want to jump in?

[veritas]

The election is available for unimproved real estate.

[skhyatt]

so the info in TTB is wrong?

[Unregistered]

If you are talking about a personal residence and a 1040 Personal income tax return.....
I do not believe that you can take the "unused" Real Estate Tax deduction as an increase in basis when you sell your home. Because it is used....in the Standard Deduction.

When you use the standard deduction in place of itemizing your deductions (Schedule A), it seems to me that when you compared which was better, actual or Standard, you would have included your real estate taxes in your actual expenses to see if you could go over the standard deduction. In that case, it would seem, (and I would need to look up the exceptions), that you are considered to have used your Real Estate Tax deducton which is included in the Standard Deduction which you chose to use because it was a better deduction than using your actual.

[skhyatt]

makes sense

last post makes sense. again I ask, is the info on page 4-14 of TTB wrong or am I reading it wrong?

[Bees Knees]

The election is available for unimproved real estate.

The election is ALSO available for improved real estate.

Reg. Section 1.266-1(b)(ii)

[skhyatt]

Bees...

Is that section talking about a business owner only or also a homeowner. In that same section it says "(b) Taxes of the owner of such real property measured by compensation paid to his employees," I don't really see where it's saying a homeowner can do this unless it's buried in (d)?

[Bees Knees]

If you read the entire reg under 1.266-1, it does not limit the election to a business situation. Any taxes or interest or other necessary expenses that are otherwise deductible can be capitalized under the election.

[Bird Legs]

Taxes on Residence

If this is true, is it a year to year election? Use the R. E. taxes as an itemized
deduction one year then next year add it to basis?

[jimmcg]

You are correct BL, it is a year to year election. From Reg 1.266 " an election is effective only for the year in which it is made." The Reg goes on to describe the form and content of the election. Google it up and take a look.

[lsmith]

carrying charges

is the way that it is listed. I have used it on unimproved RE but not on residential because it normally is added at time of sale.

[pmedders]

If a taxpayer choses

to make the election and capitalize taxes of personal residence being taxpayer does not have enough to itemize and takes standard deduction; is there any effects to standard deduction amount?