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J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return
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J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

by J.K. Lasser Institute
October 2012
Beginner
784 pages
45h 24m
English
Wiley
Content preview from J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

16.6 Tenants’ Payment of Taxes

You generally may not deduct a portion of your rent as property taxes. This is so even where state or local law identifies a portion of the rent as being tied to tax increases.

Tenants have been allowed a deduction for property taxes in the following areas: In Hawaii tenants with leases of 15 years or more may deduct the portion of the rent representing taxes. In California, tenants who have their names placed on the tax rolls and who pay the taxes directly to the taxing authority may claim a deduction.

In New York, liability for tax is placed directly on the tenant and the landlord is a collecting agent for paying over the tax to the taxing authorities; the landlord also remains liable for the tax. The IRS ruled that it will not permit tenants to deduct a portion of rent as a payment of taxes.

EXAMPLE
A municipal rent control ordinance allowed landlords to charge real property tax increases to the tenants as a monthly “tax surcharge.” The ordinance stated that the surcharge was not to be considered rent for purposes of computing cost-of-living rental increases. The IRS ruled that the tenant may not deduct the “tax surcharge” as a property tax. The tax is imposed on the landlord, not on the tenant. The city ordinance, which permitted the landlord to pass on the tax increases to a tenant, did not shift liability for the property taxes from the landlord to the tenant. For federal tax purposes, the surcharge is merely an additional rental payment ...
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