Hello ~ I would like clarification on when can I Capitalize Property Taxes. 1. Let's say the taxpayer has an adjoining lot to their principal residence and the lot is unimproved. Okay, to capitalize property taxes on the adjoining lot? 2. What if the adjoining lot to the principal residence has another home on it, like a mother-in-laws quarters? What are the options? Thanks for your help.
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Brenda, thanks for joining the community! Just curious, is your taxpayer hitting the ceiling on the $10K of schedule A taxes and that is why you want to capitalize the taxes? I think generally, yes, you may elect to capitalize the taxes on the lot, but the first step is always to determine the nature of the property (ie: residence, investment, farm, rental, business, etc).
For more, see Carrying Charges on page 24, Pub 535: https://www.irs.gov/pub/irs-pdf/p535.pdf
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Brenda, thanks for joining the community! Just curious, is your taxpayer hitting the ceiling on the $10K of schedule A taxes and that is why you want to capitalize the taxes? I think generally, yes, you may elect to capitalize the taxes on the lot, but the first step is always to determine the nature of the property (ie: residence, investment, farm, rental, business, etc).
For more, see Carrying Charges on page 24, Pub 535: https://www.irs.gov/pub/irs-pdf/p535.pdf
Thank you for choosing PTO!
Hi,
Can you capitalize the expenses for the investment property without having to file section 266 election every year?
Thanks.
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