foreign property taxes vacation home

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Message Board foreign property taxes vacation home

This topic contains 9 replies, has 6 voices, and was last updated by William Dewberry 3 days, 8 hours ago.

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  • #147665
    Pat Szekel
    Participant

    I have a client with a vacation home in Vancouver Canada.  Are the foreign property taxes still deductible on the California return and if so where since it is no longer a federal deduction?

    Vancouver has also instituted an empty homes tax and BC is putting in a BC Speculation tax can these be deducted as property taxes for California.

  • #147840
    Lynn Freer
    Participant

    Yes foreign property taxes are allowed on schedule A. The additional taxes are deductible if they meed the definition in IRC Sec. 164

  • #147851
    Pat Szekel
    Participant

    Follow up question.  How would you report this on the Sch CA.  The box (5B) to add to state and local property taxes is blacked out.  The only place to make an adjustment is line 6 Other Taxes and it just allows subtractions.  Would you put the amount in here as a negative?  Note the Federal no longer allows this as a deduction so it would not show up in column A line 5B

  • #148522
    James Uber
    Participant

    Foreign property taxes are NOT allowed on SCH A.  I have the same basic situation for a house in Italy — are these foreign property taxes allowed as a California deduction, and how to get them on the SCH CA?

  • #148567
    Randal Thornally
    Participant

    I also have a client with a Vancouver vacation home. Foreign real property taxes, which had been fully deductible for Federal and California purposes through 2017, are no longer deductible on the Federal Schedule A. However, since California did not conform to the TCJA I would have thought there would be a way to make an adjustment on the California Form CA(540)- California Adjustments – Residents.

    I have reviewed both the FTB and ProSystem instructions. Neither source seems to address this issue. Am I missing something here or is this a bigger problem that needs to be addressed? Thanks.

  • #148589
    Sandy Weiner
    Participant

    We are checking with the FTB on this. We’ll post something as soon as we hear back.

  • #148672
    Sandy Weiner
    Participant

    We just received the following information from the FTB:

    For foreign real property taxes, taxpayers will enter the amount on line 6, column C. That column is currently shaded so we will be revising the Schedule CA (540 & 540NR) to un-shade line 6, column C.

  • #148673
    James Uber
    Participant

    Thanks,

    Now we only need to get our various software providers to update their products.

  • #148677
    Pat Szekel
    Participant

    To complicate matters for the software providers.  If you have a foreign vacation home that is a part year rental then the personal portion of the property tax that is disallowed on the rental schedule should go to the California return but not to the federal return.

  • #148700
    William Dewberry
    Participant

    Pat Szekel, blast from the past, USC taxation classes.