Deducting Melloroos

[jyeh74]

I found this link on MR and whether or not it is tax deductiblehttp://www.ftb.ca.gov/individuals/faq/net/909.shtml

It states that
Most of the time, you cannot deduct real estate taxes assessed for local benefits and improvements. However, you can deduct them if they are for maintenance, repair, or interest charges related to those benefits. Some examples of local benefits are:

Sidewalks
Streets
Sewer lines
Water mains
Public parking facilities
Other similar improvements

Isnt the melloroos in the newer Irvine communities for improvements?

 

[test]

MR payments include interest charges.  How about just simplify the tax code?

 

[jyeh74]

So does that mean a portion of the MR is tax deductible only?  i.e. 1.8% total effective tax rate = part of that is tax deducitble depending on how it is broken down for interest/maintenance/repair.  Anyone know how it works exactly?

 

[The I-R-V]

My fear is that after years of taking the whole deduction on MR, the IRS and state one day sends me one of those back taxes notice for tens of thousands.  :-\

 

[usctrojancpa]

My fear is that after years of taking the whole deduction on MR, the IRS and state one day sends me one of those back taxes notice for tens of thousands.  :-\

Unless you really cross the line (aka willful disregard of the tax laws), the IRS can only go back 3 years from when the tax return is filed.  The IRS just doesn't have the manpower to undertake such a large scale project like that. 

 

[uciguy]

My fear is that after years of taking the whole deduction on MR, the IRS and state one day sends me one of those back taxes notice for tens of thousands.  :-\

Well they should, because you are evading taxes if you are doing this.  I don't know why so many people seem to feel that deducting things you shouldn't is a victimless crime.  You are stealing from everyone.

 

[rimrattler6]

So, i'm not sure if I missed it, but are any portion of Mello Roos (legally) tax deductible?? If yes, what is your source for this information? Has anyone confirmed with a legit CPA?

 

[zakami]

So, i'm not sure if I missed it, but are any portion of Mello Roos (legally) tax deductible?? If yes, what is your source for this information? Has anyone confirmed with a legit CPA?

Why a CPA? CPAs are qualified auditors and not necessarily experts on taxation although they can certainly be both.

 

[usctrojancpa]

So, i'm not sure if I missed it, but are any portion of Mello Roos (legally) tax deductible?? If yes, what is your source for this information? Has anyone confirmed with a legit CPA?

Why a CPA? CPAs are qualified auditors and not necessarily experts on taxation although they can certainly be both.

True, many CPAs are qualified auditors like myself (many do get into the tax side or get very familiar with taxes).  A good choice would be to speak with an EA or the IRS.  Determining whether part or all of MR is deductible is a not a black and white issue and can involve a lot of research and digging to get to the right answer. 

 

[oakcreekrenter]

My fear is that after years of taking the whole deduction on MR, the IRS and state one day sends me one of those back taxes notice for tens of thousands.  :-\

Well they should, because you are evading taxes if you are doing this.  I don't know why so many people seem to feel that deducting things you shouldn't is a victimless crime.  You are stealing from everyone.

While I understand, and can even appreciate, the sentiment, does this mean you also declare everything you are supposed to on your tax forms?  Do you pay use tax on all of your out-of-state purchases (i.e. Amazon)?  You could apply the same logic there - if you aren't paying use tax in CA, you're stealing from everyone in CA.

 

[rimrattler6]

I should have been more clear. Either  CPA or someone who is qualified (i.e. IRS) to make that determination and stand by it. . .

I'll refrain from answering oakcreek's question.... :-X

 

[uciguy]

While I understand, and can even appreciate, the sentiment, does this mean you also declare everything you are supposed to on your tax forms?  Do you pay use tax on all of your out-of-state purchases (i.e. Amazon)?  You could apply the same logic there - if you aren't paying use tax in CA, you're stealing from everyone in CA.

I do, actually, although the amount is pretty trivial.  It seems most of the few places I order things online from have locations in CA and collect sales tax.  I realize the tax code is a mess that needs to be reformed, and I'm sure many people just make mistakes, but knowingly cheating on your taxes by deducting things you shouldn't or failing to pay use tax takes money from education, healthcare, etc.  I'm not saying you are a bad person if you are doing something like this, it is just frustrating to see people advocate doing something that is illegal just because it is pretty easy to get away with.