AboutHelen P. O`Planick, EA Expertise I am a tax professional, with experience in individual taxation. I would prefer not to answer questions about non-resident aliens or corporate taxation. Please do not ask me state related questions, unless the state is Pennsylvania. There are 42 taxing states and 42 TOTALLY different sets of state tax law.
Experience I have been preparing tax returns almost all my life. I have been in professional practice for 25 years and I am enrolled to practice before the Internal Revenue Service.
Organizations National Association of Enrolled Agents
Publications I am a prior Money Magazine Tax Test taker and have been quoted extensively in all media including monthly periodicals and books by tax authorities.
Question QUESTION: I assume if real estate taxes are used on schedule A as a deduction they can't be used later as an expense when selling the property regardless of whether the deduction has been eliminated by alternative minimum tax. Under that assumption, I wonder if there is a way to calculate just enough of property tax to use as a deduction to keep the return from being subject to alternative minimum without going through multiple guesses involving calculating the miserable thing to achieve that result?
ANSWER: Your assumption is correct. You can either capitalize the taxes into the property with a yearly election or you can take them on Sch A, you can't do half and half or any ratio.
As to the calculation, there is no shortcutting.
Helen, EA in PA
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QUESTION: I don't know what you mean by 'shortcutting' I have approximately a dozen properties and would like to deduct as much as possible on schedule A rather than wait and capitalize them later. You seem to agree to my assumption that if I put them on schedule A and am screwed by the alt min, I would be better off to capitalize them later. I am trying to figure out the maximum I can deduct on schedule A for some of the parcels without triggering Alt Min and then save the rest to capitalize later. There must be some way to come close to what deduction amount will solve this question without going through recalculating all of the stupid extra schedules reducing various exemptions and deductions myriad times. I suppose if I'm not paying at least the 26% with whatever I've already listed on schedule A I can keep reducing my RE tax deduction until I am paying at least that, but that is going to be a lot of work. Maybe turbo tax would make it easier?? thanks.
Answer If all the properties are personal use properties, then you have to calculate the AMT or lack of(there are no shortcuts to figure out the AMT, that is what I meant by shortcutting).
Will a 20 buck tax software do it? How good is the inputter? Tax software only makes a pretty return, it has no knowledge except mathamatical calculations.
