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QUESTION: I am building onto my daughter's house in Redondo Beach, CA so my wife and I can move in. We won't have an ownership stake.

Can I take the over $13,000 in fees and school taxes as a deduction on my state & federal income tax?

ANSWER: Patrick,

California conforms to Federal tax laws on the deductibility of property taxes paid for a primary residence (assuming this will be your new primary residence) and yes you can deduct the properly assessed taxes on your portion on the property so long as your daughter does not also deduct the same.  The fess on the other hand are not generally deductible for either California or Federal law.  

I hope this help you understand your tax situation better and please feel free to contact me again should you require additional clarification.

Best Regards,


Ryan Hasselmeier
Tax Advisor

AdvisorsGroupUSA

---------- FOLLOW-UP ----------

QUESTION: So, you're saying if the city calls it a fee instead of a tax, It's not deductible?


Thanks, Pat

Answer
Patrick,

The tax assessed as property taxes based on the increased value of the home will be deductible. It is her tax and if paid by her it would be her deduction.  However if she allows you to pay "your portion" then you can deduct it since it is your primary residence as well.  She would not deduct any of the amount you paid and are deducting rather the amount she paid for her remaining portion.  

Any fees for inspections, permits, taxes specific to the construction (not property taxes), etc will be added to the basis of the home by your daughter regardless who pays it.

Best Regards,


Ryan Hasselmeier
Tax Advisor

AdvisorsGroupUSA

Tax Law (Questions About Taxes)

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Ryan Hasselmeier

Expertise

A degreed accountant with significant experience in taxation compliance and resolution at all levels of government regulation.

Experience

Experienced Tax Advisor, Consultant and Preparer for over 15 years. In private practice for nearly 12 years now. Experienced in all areas of taxation: International, Federal, State, Local, etc

Organizations
Current Chairman of the American Tax Professional Association Inc, a non-profit professional business association of accountants, tax preparers, consultants and advisors who specialize in compliance and representation of taxpayers before federal, state and local government regulators.

Education/Credentials
Bachelor of Business Administration in Accounting and Management Information Systems from Sam Houston State University in Huntsville Texas.

Awards and Honors
Passed all parts of the Enrolled Agent Certification Examination administered by the Department of the Treasury and a Registered Tax Return Preparer with the Internal Revenue Service.

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