Will there be a Crackdown on Homeowner Tax Writeoffs?
| Have you been writing off your mortgage interest and real estate taxes correctly on your federal income tax filings? Or maybe not? Whatever your answer, an influential Capitol Hill committee believes tens of thousands of homeowners have been deducting a lot more than they should — to the tune of hundreds of millions of dollars a year. Now the nonpartisan congressional Joint Committee on Taxation has proposed to the Senate and the House that they consider plugging two revenue-losing loopholes in the system, and crack down on homeowners who are deducting too much. |
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Under current tax code rules, homeowners are permitted to write off local and state property taxes that are assessed on the basis of property valuations. But commonplace special levies and user fees — for governmental services that mainly benefit individual houses or neighborhoods rather than the entire municipality — are not deductible. Special parkland improvements, sewers, sidewalks, garbage collections, landscaping, tennis courts and a long list of others sometimes are funded by tax levies on the property owners directly benefited. Local governments typically include their special benefit levies in with their regular property tax bills when they send them to homeowners, but they do not report the itemized breakdowns to the federal government.
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