Property tax + deductions

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Locked
hammond
Posts: 22
Joined: Mon Jul 13, 2015 2:34 am

Property tax + deductions

Post by hammond » Sun Jul 15, 2018 2:27 am

I am trying to better plan our savings for this year. Can someone shed some light on how deductions work with property taxes.
We live in a VHCOL area and our property taxes are rather high. It is ~30k on a 2.5 million house.

Do we get to write off a portion of our property taxes? What are some ways to reduce the impact of property taxes?

sk2101
Posts: 184
Joined: Sun Jun 02, 2013 4:54 pm

Re: Property tax + deductions

Post by sk2101 » Sun Jul 15, 2018 5:27 am

there is a limit of $10k for state and local taxes + property taxes deduction

mouses
Posts: 3844
Joined: Sat Oct 24, 2015 12:24 am

Re: Property tax + deductions

Post by mouses » Sun Jul 15, 2018 6:07 am

sk2101 wrote:
Sun Jul 15, 2018 5:27 am
there is a limit of $10k for state and local taxes + property taxes deduction
This limit is from the new tax bill, the one that's supposed to save people money. :twisted:

Some places have a provision to reduce taxes for seniors, long time residents, etc. In my area it does not amount to much for me, about $300 on a bill of $10,000.

User avatar
dwickenh
Posts: 1451
Joined: Sun Jan 04, 2015 9:45 pm
Location: Illinois

Re: Property tax + deductions

Post by dwickenh » Sun Jul 15, 2018 7:49 am

hammond wrote:
Sun Jul 15, 2018 2:27 am
I am trying to better plan our savings for this year. Can someone shed some light on how deductions work with property taxes.
We live in a VHCOL area and our property taxes are rather high. It is ~30k on a 2.5 million house.

Do we get to write off a portion of our property taxes? What are some ways to reduce the impact of property taxes?
I have been fighting the same problem(on a smaller scale) in the state of Illinois. I will be able to freeze the taxes if I can control my

income at age 65. The best answer for me(you may not have this choice) is to move to a more tax friendly state or reduce the value

of my home by downsizing.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

User avatar
LadyGeek
Site Admin
Posts: 49280
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Property tax + deductions

Post by LadyGeek » Sun Jul 15, 2018 9:16 am

This thread is now in the Personal Finance (Not Investing) forum (taxes).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
FiveK
Posts: 5846
Joined: Sun Mar 16, 2014 2:43 pm

Re: Property tax + deductions

Post by FiveK » Sun Jul 15, 2018 8:58 pm

hammond wrote:
Sun Jul 15, 2018 2:27 am
I am trying to better plan our savings for this year. Can someone shed some light on how deductions work with property taxes.
Might be worth your time to put numbers into the "what if?" worksheets of TurboTax, TaxAct, etc., or another tool such as the personal finance toolbox spreadsheet.

Bad news is that your property tax deduction is limited by the IRS. Good news is that the Alternative Minimum Tax, which ignores property taxes altogether, has been reduced significantly. Only way to know the net effect is to do the calculations.

delamer
Posts: 6423
Joined: Tue Feb 08, 2011 6:13 pm

Re: Property tax + deductions

Post by delamer » Sun Jul 15, 2018 9:36 pm

Try the TaxCaster app. It’s for 2017, but there is an option to estimate 2018 federal taxes.

The issue is that the standard deduction for a married couple is now $24,000. So with property taxes plus state and local taxes capped at $10,000, then your mortgage interest and other deductions must be $14,001 or more in order for the property taxes to be deductible (that is for your total deductions to be greater than the standard deduction).

User avatar
3CT_Paddler
Posts: 3229
Joined: Wed Feb 04, 2009 5:28 pm
Location: Marietta, GA

Re: Property tax + deductions

Post by 3CT_Paddler » Fri Jul 20, 2018 2:15 pm

mouses wrote:
Sun Jul 15, 2018 6:07 am
sk2101 wrote:
Sun Jul 15, 2018 5:27 am
there is a limit of $10k for state and local taxes + property taxes deduction
This limit is from the new tax bill, the one that's supposed to save people money. :twisted:
The new tax bill that also scales back the AMT and lowered rates? The AMT does more for higher income earners like the OP than any reductions to SALT. Yeah he is more than likely still going to come out ahead.

TBillT
Posts: 452
Joined: Sat Sep 17, 2011 1:43 pm

Re: Property tax + deductions

Post by TBillT » Fri Jul 20, 2018 2:36 pm

delamer wrote:
Sun Jul 15, 2018 9:36 pm
Try the TaxCaster app. It’s for 2017, but there is an option to estimate 2018 federal taxes.

The issue is that the standard deduction for a married couple is now $24,000. So with property taxes plus state and local taxes capped at $10,000, then your mortgage interest and other deductions must be $14,001 or more in order for the property taxes to be deductible (that is for your total deductions to be greater than the standard deduction).
Worse for some? I read yesterday those of us over 65 get another approx. $1300 standard deduction, so now we gotta somehow climb over a $26,600 standard deuction to itemize. Looking out of reach without getting a big new mortgage.

Supposedly we await an imminent Supreme Court tax ruling on whether state taxes can be classified as a cobtribution, thereby allowing the deduction. Which it is believed the Supreme Court will disallow that. But actaully quite a few states do allow a form of that, so sounds like the Supreme Court might be having trouble making up its mind on conditions where that may be allowable. I was actually considering that approach as Virginia allows 65% write off of certain contributions.

Jags4186
Posts: 2637
Joined: Wed Jun 18, 2014 7:12 pm

Re: Property tax + deductions

Post by Jags4186 » Fri Jul 20, 2018 2:45 pm

TBillT wrote:
Fri Jul 20, 2018 2:36 pm
delamer wrote:
Sun Jul 15, 2018 9:36 pm
Try the TaxCaster app. It’s for 2017, but there is an option to estimate 2018 federal taxes.

The issue is that the standard deduction for a married couple is now $24,000. So with property taxes plus state and local taxes capped at $10,000, then your mortgage interest and other deductions must be $14,001 or more in order for the property taxes to be deductible (that is for your total deductions to be greater than the standard deduction).
Worse for some? I read yesterday those of us over 65 get another approx. $1300 standard deduction, so now we gotta somehow climb over a $26,600 standard deuction to itemize. Looking out of reach without getting a big new mortgage.

Supposedly we await an imminent Supreme Court tax ruling on whether state taxes can be classified as a cobtribution, thereby allowing the deduction. Which it is believed the Supreme Court will disallow that. But actaully quite a few states do alliow a form of that, so sounds like the Supreme Court is having trouble making up its mind on conditions where that may be allowable. I was actaully considering that aproach as Virginia allows 65% write off of certain contributions.
I don’t see why you feel like you’re getting scammed with regards to the deduction. Essentially what happened was the playing field was made even for the people who were subsidizing your mortgage.

We purchased a home this year. If I run my taxes under 2017 rules as a renter I pay more than if I paid taxes as a home owner. In 2018 I pay the same amount regardless of whether I’m a renter or a home owner. The tax savings incentive to buy a home has been removed, but I’m made whole because taxes are overall lower.

Grt2bOutdoors
Posts: 19522
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Property tax + deductions

Post by Grt2bOutdoors » Fri Jul 20, 2018 2:51 pm

hammond wrote:
Sun Jul 15, 2018 2:27 am
I am trying to better plan our savings for this year. Can someone shed some light on how deductions work with property taxes.
We live in a VHCOL area and our property taxes are rather high. It is ~30k on a 2.5 million house.

Do we get to write off a portion of our property taxes? What are some ways to reduce the impact of property taxes?
That's not high, how'd you like to pay that on a house valued at less than half the value you list above? You're paying a rate that is a tad bit more than 1% of value. You think that's high?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Jags4186
Posts: 2637
Joined: Wed Jun 18, 2014 7:12 pm

Re: Property tax + deductions

Post by Jags4186 » Fri Jul 20, 2018 2:58 pm

Grt2bOutdoors wrote:
Fri Jul 20, 2018 2:51 pm
hammond wrote:
Sun Jul 15, 2018 2:27 am
I am trying to better plan our savings for this year. Can someone shed some light on how deductions work with property taxes.
We live in a VHCOL area and our property taxes are rather high. It is ~30k on a 2.5 million house.

Do we get to write off a portion of our property taxes? What are some ways to reduce the impact of property taxes?
That's not high, how'd you like to pay that on a house valued at less than half the value you list above? You're paying a rate that is a tad bit more than 1% of value. You think that's high?
Yea...there are places in NJ where the actual rate on homes can get up to 10% or more.

User avatar
LadyGeek
Site Admin
Posts: 49280
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Property tax + deductions

Post by LadyGeek » Fri Jul 20, 2018 3:32 pm

I removed some off-topic posts (opinions of the tax law). See: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
Please stay on-topic and state your concerns in a civil, factual manner.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

runner540
Posts: 770
Joined: Sun Feb 26, 2017 5:43 pm

Re: Property tax + deductions

Post by runner540 » Fri Jul 20, 2018 5:15 pm

delamer wrote:
Sun Jul 15, 2018 9:36 pm
Try the TaxCaster app. It’s for 2017, but there is an option to estimate 2018 federal taxes.

The issue is that the standard deduction for a married couple is now $24,000. So with property taxes plus state and local taxes capped at $10,000, then your mortgage interest and other deductions must be $14,001 or more in order for the property taxes to be deductible (that is for your total deductions to be greater than the standard deduction).
This is my understanding as well. You get only $10k to deduct for property/state/local taxes all together.

Where I live, taxes are closer to 3% of value. I'm a renter who's glad not to be subsidizing as much of your $2.5MM home anymore :sharebeer

TBillT
Posts: 452
Joined: Sat Sep 17, 2011 1:43 pm

Re: Property tax + deductions

Post by TBillT » Fri Jul 20, 2018 6:02 pm

Jags4186 wrote:
Fri Jul 20, 2018 2:45 pm
TBillT wrote:
Fri Jul 20, 2018 2:36 pm
delamer wrote:
Sun Jul 15, 2018 9:36 pm
Try the TaxCaster app. It’s for 2017, but there is an option to estimate 2018 federal taxes.

The issue is that the standard deduction for a married couple is now $24,000. So with property taxes plus state and local taxes capped at $10,000, then your mortgage interest and other deductions must be $14,001 or more in order for the property taxes to be deductible (that is for your total deductions to be greater than the standard deduction).
Worse for some? I read yesterday those of us over 65 get another approx. $1300 standard deduction, so now we gotta somehow climb over a $26,600 standard deuction to itemize. Looking out of reach without getting a big new mortgage.
I don’t see why you feel like you’re getting scammed with regards to the deduction. Essentially what happened was the playing field was made even for the people who were subsidizing your mortgage.
Not scammed at all, just saying it'll be hard to itemize given the size of the standard deduction.

User avatar
abuss368
Posts: 13018
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!

Re: Property tax + deductions

Post by abuss368 » Fri Jul 20, 2018 6:14 pm

hammond wrote:
Sun Jul 15, 2018 2:27 am
I am trying to better plan our savings for this year. Can someone shed some light on how deductions work with property taxes.
We live in a VHCOL area and our property taxes are rather high. It is ~30k on a 2.5 million house.

Do we get to write off a portion of our property taxes? What are some ways to reduce the impact of property taxes?
Hi hammond -

For itemized deduction purposes the limit is capped at $10,000 for state and local income taxes and real estate taxes.

Example

* State & local Income Taxes - $12,000
* Real Estate Tax - $10,000

Total Tax Expenditure - $22,000

Total Itemized Deduction - $10,000
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

TBillT
Posts: 452
Joined: Sat Sep 17, 2011 1:43 pm

Re: Property tax + deductions

Post by TBillT » Sat Jul 21, 2018 12:31 pm

abuss368 wrote:
Fri Jul 20, 2018 6:14 pm
hammond wrote:
Sun Jul 15, 2018 2:27 am
I am trying to better plan our savings for this year. Can someone shed some light on how deductions work with property taxes.
We live in a VHCOL area and our property taxes are rather high. It is ~30k on a 2.5 million house.

Do we get to write off a portion of our property taxes? What are some ways to reduce the impact of property taxes?
Hi hammond -

For itemized deduction purposes the limit is capped at $10,000 for state and local income taxes and real estate taxes.

Example

* State & local Income Taxes - $12,000
* Real Estate Tax - $10,000

Total Tax Expenditure - $22,000

Total Itemized Deduction - $10,000
OK what I am trying to say there is another advanced example for some states that allow *special contributions* in lieu of state tax.
Let's say you make a $18,500 qualified contribution in Virginia that gets 65% state tax credit. So now we have:

* State & local Income Taxes - $0 (after deduction)
* Real Estate Tax - $10,000
^Qualfiied Contributuion - $18,500 ($12,000 tax credit in Virginia)

Total Tax Expenditure - $10,000 (property tax only)
Total Contributuion - $18,500 before taxes (but note you are getting huge refunds of state and federal deductions)

Total Itemized Deduction - $10,000 + $18,500 = $28,500

In this example, you have vastly increased your itemized deductions which potentially nets back all of the money you gave for the "contribution" and then some.

>>But as I say, we await a Supreme Court ruling that could potentially upend this "loophole"...not sure. NJ and other states are saying they will re-define state tax as a deductible contribtuion. What I am saying a some states already allow a form of that.

Some other states allow 50% deduction for special contributions, whereas Virginia is 65%.

danaht
Posts: 541
Joined: Sun Oct 18, 2015 11:28 am

Re: Property tax + deductions

Post by danaht » Sat Jul 21, 2018 1:16 pm

Yes, $10,000 is the limit per year for state and local taxes (including property taxes). I will no longer be able to bunch my property taxes starting with 2018. On the positive side - I have decided to convert more to a Roth - because income brackets are a little lower for the next 6 years. Although, if income taxes go down even more due to an implementation of a VAT / high tariff system like Europe - I will have wished I never made the Roth conversions.

delamer
Posts: 6423
Joined: Tue Feb 08, 2011 6:13 pm

Re: Property tax + deductions

Post by delamer » Sat Jul 21, 2018 2:11 pm

TBillT wrote:
Sat Jul 21, 2018 12:31 pm
abuss368 wrote:
Fri Jul 20, 2018 6:14 pm
hammond wrote:
Sun Jul 15, 2018 2:27 am
I am trying to better plan our savings for this year. Can someone shed some light on how deductions work with property taxes.
We live in a VHCOL area and our property taxes are rather high. It is ~30k on a 2.5 million house.

Do we get to write off a portion of our property taxes? What are some ways to reduce the impact of property taxes?
Hi hammond -

For itemized deduction purposes the limit is capped at $10,000 for state and local income taxes and real estate taxes.

Example

* State & local Income Taxes - $12,000
* Real Estate Tax - $10,000

Total Tax Expenditure - $22,000

Total Itemized Deduction - $10,000
OK what I am trying to say there is another advanced example for some states that allow *special contributions* in lieu of state tax.
Let's say you make a $18,500 qualified contribution in Virginia that gets 65% state tax credit. So now we have:

* State & local Income Taxes - $0 (after deduction)
* Real Estate Tax - $10,000
^Qualfiied Contributuion - $18,500 ($12,000 tax credit in Virginia)

Total Tax Expenditure - $10,000 (property tax only)
Total Contributuion - $18,500 before taxes (but note you are getting huge refunds of state and federal deductions)

Total Itemized Deduction - $10,000 + $18,500 = $28,500

In this example, you have vastly increased your itemized deductions which potentially nets back all of the money you gave for the "contribution" and then some.

>>But as I say, we await a Supreme Court ruling that could potentially upend this "loophole"...not sure. NJ and other states are saying they will re-define state tax as a deductible contribtuion. What I am saying a some states already allow a form of that.

Some other states allow 50% deduction for special contributions, whereas Virginia is 65%.
Assuming this scheme works and assuming you are MFJ, you may have “vastly increased” your itemized deductions but your standard deduction was already $24,000. So a $4,500 difference — at the 22% federal marginal rate, you saved $990.

User avatar
abuss368
Posts: 13018
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!

Re: Property tax + deductions

Post by abuss368 » Sat Jul 21, 2018 5:32 pm

TBillT wrote:
Sat Jul 21, 2018 12:31 pm
abuss368 wrote:
Fri Jul 20, 2018 6:14 pm
hammond wrote:
Sun Jul 15, 2018 2:27 am
I am trying to better plan our savings for this year. Can someone shed some light on how deductions work with property taxes.
We live in a VHCOL area and our property taxes are rather high. It is ~30k on a 2.5 million house.

Do we get to write off a portion of our property taxes? What are some ways to reduce the impact of property taxes?
Hi hammond -

For itemized deduction purposes the limit is capped at $10,000 for state and local income taxes and real estate taxes.

Example

* State & local Income Taxes - $12,000
* Real Estate Tax - $10,000

Total Tax Expenditure - $22,000

Total Itemized Deduction - $10,000
OK what I am trying to say there is another advanced example for some states that allow *special contributions* in lieu of state tax.
Let's say you make a $18,500 qualified contribution in Virginia that gets 65% state tax credit. So now we have:

* State & local Income Taxes - $0 (after deduction)
* Real Estate Tax - $10,000
^Qualfiied Contributuion - $18,500 ($12,000 tax credit in Virginia)

Total Tax Expenditure - $10,000 (property tax only)
Total Contributuion - $18,500 before taxes (but note you are getting huge refunds of state and federal deductions)

Total Itemized Deduction - $10,000 + $18,500 = $28,500

In this example, you have vastly increased your itemized deductions which potentially nets back all of the money you gave for the "contribution" and then some.

>>But as I say, we await a Supreme Court ruling that could potentially upend this "loophole"...not sure. NJ and other states are saying they will re-define state tax as a deductible contribtuion. What I am saying a some states already allow a form of that.

Some other states allow 50% deduction for special contributions, whereas Virginia is 65%.
I am familiar with this for a number of high cost states (i.e. California, New York, and New Jersey). This is highly controversial. My understanding is the IRS has stated this will not be acceptable and will be issuing guidance on this as we move forward.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

TBillT
Posts: 452
Joined: Sat Sep 17, 2011 1:43 pm

Re: Property tax + deductions

Post by TBillT » Sat Jul 21, 2018 7:14 pm

delamer wrote:
Sat Jul 21, 2018 2:11 pm
Assuming this scheme works and assuming you are MFJ, you may have “vastly increased” your itemized deductions but your standard deduction was already $24,000. So a $4,500 difference — at the 22% federal marginal rate, you saved $990.
The "scheme" works as I noticed that Va. has apparently continued the program out to 2019 now ( has to be approved each year). Don't forget you are adding the mortgages/etc onto get up to over the Standard Deduction.

So let's check your math - say you have $10,000 mortage interest so you potentially would have $24,000 Standard Deduction (Base Case) vs. $38,500 Itemzied in the special contribtution case, so I am not sure you are capturing the full significance of this option in your quick calc above.

https://www.forbes.com/sites/davidmarot ... 3897bc25ac

Jefferson
Posts: 51
Joined: Wed Feb 21, 2018 1:37 pm

Re: Property tax + deductions

Post by Jefferson » Sat Jul 21, 2018 7:46 pm

Politics and personal incentives aside, this is an easy question and should be a 9-0 decision if it actually gets to SCOTUS. States do not get to decide what is deductible under federal income taxes.

TBillT
Posts: 452
Joined: Sat Sep 17, 2011 1:43 pm

Re: Property tax + deductions

Post by TBillT » Sun Jul 22, 2018 9:38 am

Jefferson wrote:
Sat Jul 21, 2018 7:46 pm
Politics and personal incentives aside, this is an easy question and should be a 9-0 decision if it actually gets to SCOTUS. States do not get to decide what is deductible under federal income taxes.
There are couple things going on here:
(1) Existing *special contribtution* plans that some states have that allow making contribuions with large state tax credits up to 65% in Va.
(2) In response to the Trump tax law changes, some states like NJ are proposing to classify state tax payment as a contribution

So the IRS/SCOTUS is expected to disallow Item#2 shortly (but seems to me we should have heard by now). I am not sure about Item#1 that is a pre-exisitng practice that may continue...I was considering trying Item#1 this year, but I have not yet sharpened my pencil to calculate what I want to do (mainly I probably want to do some IRA transfer to Roth IRA).

delamer
Posts: 6423
Joined: Tue Feb 08, 2011 6:13 pm

Re: Property tax + deductions

Post by delamer » Sun Jul 22, 2018 5:53 pm

TBillT wrote:
Sat Jul 21, 2018 7:14 pm
delamer wrote:
Sat Jul 21, 2018 2:11 pm
Assuming this scheme works and assuming you are MFJ, you may have “vastly increased” your itemized deductions but your standard deduction was already $24,000. So a $4,500 difference — at the 22% federal marginal rate, you saved $990.
The "scheme" works as I noticed that Va. has apparently continued the program out to 2019 now ( has to be approved each year). Don't forget you are adding the mortgages/etc onto get up to over the Standard Deduction.

So let's check your math - say you have $10,000 mortage interest so you potentially would have $24,000 Standard Deduction (Base Case) vs. $38,500 Itemzied in the special contribtution case, so I am not sure you are capturing the full significance of this option in your quick calc above.

https://www.forbes.com/sites/davidmarot ... 3897bc25ac
The example that you originally proposed did not include any mortgage interest, so it wasn’t included in my calculation. I assumed you had no mortgage.

If you have mortgage interest or charitable contributions then the calculation changes, of course.

No one knows yet if this workaround is accepted.

SuzBanyan
Posts: 184
Joined: Thu Jun 02, 2016 11:20 am

Re: Property tax + deductions

Post by SuzBanyan » Sun Jul 22, 2018 7:56 pm

Jefferson wrote:
Sat Jul 21, 2018 7:46 pm
Politics and personal incentives aside, this is an easy question and should be a 9-0 decision if it actually gets to SCOTUS. States do not get to decide what is deductible under federal income taxes.
To my knowledge, the only lawsuit filed to date challenges the constitutionality of any limitation on the SALT deduction on Federal taxes: https://ag.ny.gov/sites/default/files/s ... hibits.pdf

This case is based on the 10th Amendment guarantee of the right to tax to States. “A SALT deduction has been a part of every federal income tax law since the first federal income tax was enacted in 1861. The deduction is necessary to ensure that the exercise of the federal government’s tax power does not unduly interfere with the sovereign authority of the States to determine their own taxation and fiscal policies by crowding the States out of traditional revenue sources, like income, property, and sales taxes.”

The likelihood of a prompt resolution of such a case, which was filed last week, by the SCOTUS, is unclear.

Most commentators recognize that any attempt to kill “workarounds” adopted in 2018 would also apply to all the other similar state laws that have been in existence since at least 2001. Many of these workarounds were adopted by states to appeal to their taxpayers who were subject to federal AMT and raises the question whether any IRS guidance on the issue might apply to tax years before 2018.

Colinvaux, Roger, Failed Charity: Taking State Tax Benefits into Account for Purposes of the Charitable Deduction (April 30, 2018). Buffalo Law Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3172179.

In Footnote 90, the author acknowledges: “Even if it was possible under prior law for taxpayers, especially AMT taxpayers, to profit from the charitable deduction, it does not follow that it was right or correct as a matter of law. By opening the floodgates to charitable tax shelters the TCJA has called attention to a problem that already existed in the periphery. Further, by undermining the full deduction rule, the TCJA gives the Treasury Department the opportunity to protect the integrity of the charitable deduction.”

There is another comprehensive discussion which can be read here:
https://itep.org/salt-charitable-workar ... arrow-one/

Author Carl Davis questions the ability of this issue to be resolved without further Congressional action. From the Executive Summary: “There appears to be no basis in existing law for reducing the federal charitable deduction when some types of tax benefits are received (e.g., large state tax credits, including the new workaround credits) but not others (e.g., small state tax credits, state tax deductions, or even the federal deduction itself). This makes IRS or Treasury action an all-or-nothing proposition: either all types of tax benefits impact the size of the federal charitable deduction (an administratively complex outcome) or none of them do (that is, the problem remains unresolved).”

User avatar
LadyGeek
Site Admin
Posts: 49280
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Property tax + deductions

Post by LadyGeek » Sun Jul 22, 2018 9:55 pm

I removed an off-topic post questioning the fairness of the current tax brackets and deductions vs. income level. This thread has run its course and is locked (derailed). See: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
Note that discussions of proposed court action (what "might" happen) is off-topic.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Locked