5 In year 1 Peter and Shaline Johnsen moved into a home in a

5. In year 1, Peter and Shaline Johnsen moved into a home in a new subdivision. Theirs was one of the first homes in the subdivision. In year 1, they paid $4,100 in real property taxes to the state government, $1,200 to the developer of the subdivision for an assessment to pay for the sidewalks, and $890 for real property taxes on land they hold as an investment. What amount of property taxes are the Johnsens allowed to deduct assuming their itemized deductions exceed the standard deduction amount before considering any property tax deductions?

Deductible tax amount

?

Solution

Real property taxes paid to state governments of $4100 and real property taxes on land of $890 is deductible so total deductible amount is $4990.

Taxpayers are not allowed to deduct fees paid for assessment for local benefits such as streets and sidewalks.