The California Franchise Tax Board ("FTB") has reminded taxpayers that only the portion of real property taxes that is based on the assessed value of the property may be deducted as an itemized deduction. Other charges added on to the real property tax bill may not be deducted. These include non-ad-valorem special assessments, Mello-Roos taxes, direct levies, fees and other charges. You can identify the non-deductible amounts on your real property tax bill as those charges that do not include a tax rate percentage. Beginning with the 2012 tax year, the FTB will revise Schedule CA of Form 540 to request specific information related to the itemized deduction for real property taxes.
This limitation only applies to real property taxes that are deductible as itemized deductions, such as your home or other personal use real property. If you own real property that is used in a business or held for the production of rental income, these other charges are still deductible on the schedule for business or rental income. Additional information is available on the FTB website at http://www.ftb.ca.gov/aboutFTB/newsroom/Schedule_CA_Real_Estate_Tax_Deduction.shtml.
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