[laceylady]

I love research. After reading Jimbo's post above re IRS Topic 503 and thisIRS General Counsel letter I found via this link --http://www.irs.gov/pub/irs-wd/12-0018.pdf--I have a different take on deductibility of Bond interest and CDD taxes. I would deduct them both unless I read something different. I think we were just told the "bond" wasn't deductible. I don't think we asked about the interest.

I did taxes in WA state where the items in the CDD tax were part of our regular tax bill. We had a LID (Lake Improvement District) which is a special, costly assessment and this was deducted along with other assessments as part of the total property tax. I worked for a large firm and this was SOP.

The General Counsel letter also has some interesting things to say about "ad valorem" taxes.

Anyone planning to call the IRS for clarification--you will not get the same answer from any two people at the IRS and the verbal response can be overturned should you be audited.

Thanks for all the discussion on this subject.