tax question (pay, real estate, interest, property taxes)

[VMH2507]

I heard this morning (Jean Chatzke) that you could deduct property tax up to $500 single and $1000 couple even if you did not have a mortgage. I also thought she said that you did not have to itemize to take it. However, TurboTax says that can't take if using standard deduction. Who is right?

[runrgirl]

You can only deduct property taxes as long as you paid them. If you don't have a mortgage you still have to pay property taxes therefore you can deduct whatever amount you paid. You cannot deduct any property tax if you don't pay it- example if you rent. There is no single or married deduction the amount you deduct is what you paid the whole previous year.

[North Beach Person]

Nor can you deduct property taxes if you're not responsible for them. IE: you pay the property tax for your parents and you're not on the deed. Learned that the hard way.

[VMH2507]

I went to the Today Show website and replayed Jean Chatzkey piece from this morning and she definitely said that even homeowners who took standard deduction could take $500 (single) or $1000 (couple). It apparently is a new thing for 2008 and 2009. There is a limit -- it is what you paid but no more than $500/1000. Then I went to TurboTax website and finally found where they said the same thing. It was just the Turbotax program itself that said you had to itemize in order to take deduction.

[StealthRabbit]

or maybe.... this is relating to personal property taxes, vs. REAL property taxes (Which vary by state). Most often this is on vehicle registration, or personal property that you also use for business purpose. But I imagine some states have personal property taxes, just because you own something. In any event you will need a receipt or statement indicating you actually paid the tax you are claiming as a deduction.

I wouldn't say Turbo Tax is definitively correct.

[suzie02]

Originally Posted by VMH2507

I went to the Today Show website and replayed Jean Chatzkey piece from this morning and she definitely said that even homeowners who took standard deduction could take $500 (single) or $1000 (couple). It apparently is a new thing for 2008 and 2009. There is a limit -- it is what you paid but no more than $500/1000. Then I went to TurboTax website and finally found where they said the same thing. It was just the Turbotax program itself that said you had to itemize in order to take deduction.

Yes, I heard about this before. Basically people who had little or no mortgage were being penalized by not being able to take any deduction for property taxes. This new law will benefit those not itemizing deductions who pay property taxes.

[Asheville Native]

Originally Posted by suzie02

Yes, I heard about this before. Basically people who had little or no mortgage were being penalized by not being able to take any deduction for property taxes. This new law will benefit those not itemizing deductions who pay property taxes.

If combined with your other deductions they exceed your standard deductions, then they are deductable.

A single year of property tax leaves me short, (as far as being able to deduct them) but since property taxes can be paid in early January for the current year, and late fall for the next year, I end up paying twice in one tax year so I can deduct them, at least get a bigger deduction every other year, vs. not at all.

[forest beekeeper]

We deduct all taxes that we pay.

But there are qualifications to do so.

[VMH2507]

This is something new and not for people who itemize but for those who take standard deduction because of low or no mortgage interest.

[AustinExPat]

This is why I don't use tax software. Sorry to be answering too late, but, YES, YES, YES, you could increase your 2008 standard deduction by $500 (single) or $1000 (couple) for real estate taxes or certain other expenses. It was indeed a special deal for those who do not itemize.

VMH2507, did you manage to find this tax break in your software eventually?