"SMF" wrote
All three should be able to take a deduction for their share of the property taxes. Proving it, if it comes up, will be more problematic, but not impossible.
-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net
It depends on the underlying arrangements. It sounds like the account owner only gets to make the deduction, but I could be mistaken. When you say "all are liable" what do you mean? Who will hold you liable, the government, your siblings, a trust arrangement? It doesn't sound like there are any LLC, FLP, or trust documents that outline responsibilities of each partner. You should definitely consult an estate planner regarding your current arrangement. You all are in a position to create trouble (especially upon the death of one of the siblings). Lawsuits, family arguments, divorces, remarriages, and a dozen other situations could threaten the property by keeping it in your names. The costs of the potential problems far outweigh the costs of seeking professional advice.
Well, since they all three own the property, it must be so titled, i.e. in all their names. therefore they split the deduction. Doesn't matter where funds come from. ChEAr$, Harlan Lunsford, EA n LA
Whose bank account the money comes out of does not determine who gets the deduction. Assuming all three names are on the deed to the property and they each own 1/3, then absent any special agreements, they should each get 1/3 of the income & expenses related to the property.
The each own a 1/3 undivided interest in the property, therefor, they each deduct 1/3 of the taxes. to get it in erspective, consider that they are "partners" and if they filed a 1065 they would have the 1/3 tax liability distributed to each of them--same goes for a Trust.
Do people really get to deduct taxes they didn't pay?
The fact that the taxes were paid _through_ a single account shouldn't matter, but the fact that their _source_ was each of the three people does. If one of the owners has a bad year so the others each pay half the taxes, I think they deduct what they paid. (Or, it could be considered that they gifted the third with his share of the taxes, which he paid from the gifts; but I think that would need to be done explicitly.) Seth
Well DUH! Point of clarification.
"Well, since they all three own the property, it must be so titled, i.e. in all their names. therefore they split the deduction. Doesn't matter from which account the funds come from, (added!) as long as they all pay their fair share." there, that better?
ChEAr$, Harlan Lunsford, EA n LA
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