[Schaumburger]

I went to open house today on a 3 yr. old home that still had a fairly large bond balance. The TV sales agent told me that the interest portion of the yearly bond payment is tax deductible. Is this true?

[784caroline]

Simple answer...NO!!

[buggyone]

Your Villages Properties agent told you WRONG.

The answer is NO!

[Sunshine Mary]

I was told NO

[Bryant]

According to our AARP tax preparer..."NO".

[Schaumburger]

That is scary -- this agent said he had worked for TV for 10+ years. I wonder how many other people he has given this misinformation to?

[jane032657]

The principal portion is not tax deductible but are you all sure the interest of the bond itself is not tax deductible? My husband is a CPA, we are not there yet (we own a home in TV but just bought it in November) ; he is going to research this as he is very surprised that the interest itself would not be tax dedutible. It is interest paid on a personal residence and the bond is secured by the property. We are interested in becoming more educated on this. If there is a technical reason whay the interest itself would not be tax deductible, he is curious what it is. Help inform us with details. Thanks.

[Luv2travel]

Originally Posted by jane032657

The principal portion is not tax deductible but are you all sure the interest of the bond itself is not tax deductible? My husband is a CPA, we are not there yet (we own a home in TV but just bought it in November) ; he is going to research this as he is very surprised that the interest itself would not be tax dedutible. It is interest paid on a personal residence and the bond is secured by the property. We are interested in becoming more educated on this. If there is a technical reason whay the interest itself would not be tax deductible, he is curious what it is. Help inform us with details. Thanks.

We would all appreciate knowing the results of your husband's research.

[asianthree]

paying a large bond makes you feel better if you think you can

[OpusX1]

My tax preparer told me that the interest on the bond is deductible, just like the interest on the mortgage.

[Schaumburger]

Originally Posted by Luv2travel

We would all appreciate knowing the results of your husband's research.

I am definitely interested in the correct answer about the interest portion of an owner's yearly bond payment being tax deductible.

[2 Oldcrabs]

When looking at "For Sale by Owner", many people told me they deducted the "Total Amount" of the tax bill. If they get audited, they will play "dumb" ! Sounds like Corporate "risk management".

[tommy steam]

Originally Posted by jane032657

The principal portion is not tax deductible but are you all sure the interest of the bond itself is not tax deductible? My husband is a CPA, we are not there yet (we own a home in TV but just bought it in November) ; he is going to research this as he is very surprised that the interest itself would not be tax dedutible. It is interest paid on a personal residence and the bond is secured by the property. We are interested in becoming more educated on this. If there is a technical reason whay the interest itself would not be tax deductible, he is curious what it is. Help inform us with details. Thanks.

It would sure be great if your husband found out the correct information about this and than posted on here...thanks

[784caroline]

The tax bill you get from Sumter county ..CLEARLY....identifies the bond payment as a Non-Advolrem tax, which is not deductible as an interest expense. How people "legally" get around this is to take a home equity loan out on your house and pay the bond off outright ....then you are only paying the HEL where the interest is deductible.

[jimbo2012]

See pub, Publication 535 (2011), Business Expenses

And Tax Topics - Topic 503 Deductible Taxes



Real Estate Taxes

Deductible real estate taxes are any state, local, or foreign taxes on real estate levied for the general public welfare. The taxing authority must base the taxes on the assessed value of the real estate and charge them uniformly against all property under its jurisdiction. Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property.

Taxes for local benefits. Generally, you cannot deduct taxes charged for local benefits and improvements that tend to increase the value of your property. These include assessments for streets, sidewalks, water mains, sewer lines, and public parking facilities. You should increase the basis of your property by the amount of the assessment.

You can deduct taxes for these local benefits only if the taxes are for maintenance, repairs, or interest charges related to those benefits. If part of the tax is for maintenance, repairs, or interest, you must be able to show how much of the tax is for these expenses to claim a deduction for that part of the tax.

Example.

To improve downtown commercial business, Waterfront City converted a downtown business area street into an enclosed pedestrian mall. The city assessed the full cost of construction, financed with 10-year bonds, against the affected properties. The city is paying the principal and interest with the annual payments made by the property owners.

The assessments for construction costs are not deductible as taxes or as business expenses, but are depreciable capital expenses. The part of the payments used to pay the interest charges on the bonds is deductible as taxes.