Post # 1
I have question about claiming property taxes on a tax return. So my grandmother passed away last March and I inherited some money from her. My grandfather is not good with money at all so I offered to pay the property taxes on his homes in two different states with my inheritance.
He has been bugging me to give him information on how much I paid last year so he can claim it on his taxes. As I was talking to him just now, it started not to make sense. My first question is can someone claim property taxes on a tax return. I have never owned property so I have no idea. If so, would he be able to if I am the one that paid? It seems fraudulent to me to claim payment on properties that you didn’t make.
Lastly, if he can’t because he didn;t make the payments and I did, would I be able to claim the payments on my taxes even if I don’t own the property?
Post # 3
Short answer; go to a CPA.
Long answer; This is going to very state to state. On federal tax returns, you can claim property taxes as an expense on rental property or for a business owned that uses the property to operate. Since you wouldn’t own these, you couldn’t claim the taxes.
Some states have credits for property taxes. My state has a homestead tax credit for property taxes paid on your home. It only applies to the home you live in.
In both of these case, you couldn’t claim it on your returns. But I would really go see a tax proffessional as they will be the best resource. Espeically with also having inheritance from this year, having someone who knows what they are doing is important.
Post # 4
@purple_orchid: Hi! I found the answer to whether or not *you* personally can take the deduction-
“To take the deduction, you must be personally liable for the property tax. This means you can’t make the online property tax payment for someone else’s home and take the deduction yourself.”
Post # 5
Also, referenced from the IRS website (a much better source than my above reference). To sum it up, it appears neither one of you are eligible for the deduction, based on the two criteria below. Hope this helps!
Tests To Deduct Any Tax
The following two tests must be met for you to deduct any tax.
The tax must be imposed on you.
In general, you can deduct only taxes imposed on you.
Generally, you can deduct property taxes only if you are an owner of the property. If your spouse owns the property and pays the real estate taxes, the taxes are deductible on your spouse’s separate return or on your joint return.
You must pay the tax during your tax year.
If you are a cash basis taxpayer, you can deduct only those taxes you actually paid during your tax year. If you pay your taxes by check, the day you mail or deliver the check is the date of payment, provided the check is honored by the financial institution. If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of payment. If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). See Publication 538, Accounting Periods and Methods, for details.