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Re: Any changes in what is considered "real property taxes " by IRS?
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Thanks everyone,
The 1098s I received for the past few years always had the correct tax amount. I had about $10,000 of mortgage interest so even with the $10,000 SALT limit, it still makes sense for me to itemize.

Posted on: 1/27 15:49
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Re: Any changes in what is considered "real property taxes " by IRS?
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I sort of agree with the "tangential argument", the differentiation for itemized vs standard has mostly moved to the mortgage interest now. That being said, someone who pays say 7K in NJ income tax, 7K in mortgage interest and 7K in property taxes should target itemizing (17K total vs 12K standard) including capturing the maximum amount of allowable property taxes up to the SALT 10K limit. To that aim, comparing indeed the 1098s over the years should be helpful. If PILOT taxes are not in the property taxes box, maybe there is a way to capture the full PILOT amount in a different section of the return - that would be a nice turn of events right? PILOTs please chime in...

Posted on: 1/27 12:16
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Re: Any changes in what is considered "real property taxes " by IRS?
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Haven't seen the 1098 for this year, put atleast up until 2017,the full amout paid to the city was being reported.
That said, even if that were to happen, the impact for most should be minimal (obviously each situation could be different and there is possibly a hit for you). Reason being SALT which inculdes all state tax and property tax payments is capped at 10k and the standard deduction itself is 12k for individuals and 24k for married couples.
So, generally for families, standard deduction might make sense unless they have a high interest burden (or medical expenses). If they have high interest burden, then reasonable assumption would be that there is decent amount of NJ (or neighbouring state) income tax being paid which might be a significant part of the 10k SALT limit and this makes PILOT inclusion or non inclusion irrelevant.
Individuals filers obvioulsy have a much higher change of going beyond the standardized deduction and not having enough state income taxes, so might be slightly more relevant but even then given the generally high state taxation here, that leaves very little room.
Apologies, if the above might be a little bit tangential and doesn't really answer your question.

Posted on: 1/27 10:32
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Re: Any changes in what is considered "real property taxes " by IRS?
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I believe PILOT (payment in lieu of taxes) are not considered real prop taxes and cannot be counted towards SALT tax deductions. But I don't think this is anything new. Did your 1098 from last year show a bigger number?

Posted on: 1/26 13:41
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Any changes in what is considered "real property taxes " by IRS?
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Hi guys, hoping someone here can shed some light on this. I just got my 1098 from my mortgage company PennyMac. First thing I noticed was box where they put real estate tax. It only had $922 dollar even though thousand more were paid into and out of the escrow account. In fact my property tax bill actually went up quite a bit this year even though I live a building with tax abatement. When I got in touch with PennyMac about correcting this figure here's what they said
Quote:
This year we updated what we report on your Year End Statement to exclude special assessments, and payments for services to or on behalf of your taxing authority such as assessments for side walks, water mains, sewer lines or similar improvements, trash collection, solar power or other electrical improvement loans, or water usage fees. Please note that these types of tax payments are not considered by the IRS to be real property taxes and are not required to be reported.


I am not sure how to deal with this. I use turbotax to do my taxes and obviously my tax refund decreases quite a bit.

Posted on: 1/26 13:15
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