Schedule A Real Estate Taxes Paid

The rental income and expenses all flow through Schedule E. This hits your 1040 separate from Schedule A.

I know. You are right. But I am talking about investment property real estate taxes not rental.

Sometimes a longer explanation helps. You have a piece of real estate you hold for investment. It's not rented. A vacant building? Land? A few details, and someone will give you a decent answer.

Yes, you can deduct the property tax on Schedule A. You're thinking of the restriction on mortgage interest which applies to your primary or secondary home. (Actually interest on investment property could go on Schedule A also, just not on the line you're thinking of.)

Don EA in Upstate NY

You can deduct an unlimited amount of property tax on your Schedule A. However, if you are in AMT then you get no benefit for your deduction and it might be better to make an IRC 266 election to add the property tax to your cost basis.

does IRC 266 permit this for developed real estate? I do not see that.

BEGIN QUOTE

(ii) In the case of real property, whether improved or unimproved and whether productive or unproductive:

(a) Interest on a loan (but not theoretical interest of a taxpayer using his own funds),

(b) Taxes of the owner of such real property measured by compensation paid to his employees,

(c) Taxes of such owner imposed on the purchase of materials, or on the storage, use, or other consumption of materials, and

(d) Other necessary expenditures, paid or incurred for the development of the real property or for the construction of an improvement or additional improvement to such real property, up to the time the development or construction work has been completed. The development or construction work with respect to which such items are incurred may relate to unimproved and unproductive real estate whether the construction work will make the property productive of income subject to tax (as in the case of a factory) or not (as in the case of a personal residence), or may relate to property already improved or productive (as in the case of a plant addition or improvement, such as the construction of another floor on a factory or the installation of insulation therein).

END QUOTE

yes, I saw that. So, the answer is no.

> >

I'm not following. Looks like the rules allow for IRC 266 on improved real property, which means developed real estate.

yes, but WHAT does it allow?