AMT - capitalize taxes?

- B
- Benjamin Yazersky CPA
  
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posted
16 years ago

Fri, Jun 8, 2007 5:21 PM

When an individual taxpayer is in amt, frequently no benefit will be had for deducting property taxes on the residence. Has anyone had any experience in electing to capitalize the property taxes, rather than taking a useless deduction? What issues exist? The only effect that I see is doing so will increase the basis in the residence. But that may be moot if there is not enough gain to generate tax on the sale. ___________________________________

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- H
- Harlan Lunsford
  
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posted
16 years ago

Tue, Jun 12, 2007 5:06 AM

My question is where in the code is this even permitted?

ChEAr$, Harlan Lunsford, EA n LA

- B
- Brew1
  
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posted
16 years ago

Tue, Jun 12, 2007 5:06 AM

I'm not certain this would affect capitalizing property taxes but in a recent case, the IRS calculated the (property and income) taxes as an addition on the 6251, taking the position that it didn't matter whether the taxpayer claimed them or not. Sorry, I don't have the reference handy.

- S
- San Diego CPA
  
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posted
16 years ago

Tue, Jun 12, 2007 5:06 AM

I do this on clients that hold property for investment purposes but haven't done it for personal residence. While the the home is the biggest investment in many people's lives, it's a "personal" residence and I don't think there's a good "investment property" argument, especially if you're deducting mortgage interest on a "qualified residence" rather than investment interest. This does not imply that treating interest as investment would convert the principal residence to investment property.