SACRAMENTO (CBS 5) – California homeowners may be surprised to learn that they’re about to lose part of their property tax deductions. The Franchise Tax Board will soon start enforcing a little known law that allows homeowners to deduct only the assessed value of their property.
Up to now, taxpayers who itemize have been writing off the full property tax bill, even though federal law prohibits deducting certain taxes and fees. Any tax that is a flat fee per household or an itemized charge for services assessed against specific property is not deductible.
According to the Franchise Tax Board, nondeductible charges include add-on on tax bills such as Mello-Roos or Community Facilities Districts, 1915 assessment district bonds, lighting and landscape, parcel taxes, school or college measures and bonds, water, sewer, flood, police, fire and libraries.
The size of the tax hit depends on what county the home is in. Some counties have a greater number of fees than other. The tax loss could range anywhere up to 30 percent of one’s property tax bill. The Tax Board said the change will be effective for the 2011 returns.
An Orange County lawmaker plans on introducing legislation that would allow homeowners to continue to take the deduct the entire property tax bill.
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