I have the same situation, and I've concluded that we do indeed need to reduce our RET deduction by the amount of the state ("Homeowner Tax Rebate") and city ("Property Tax Rebate") rebates. These are both explicitly defined as rebates of property tax, so it stands to reason that the deductible tax must be net of these rebates. (Because of the $10,000 local tax limit on Schedule A, none of this has any impact on my Federal itemized deduction, but it does have an impact on my New York itemized deduction.)
What I still don't know is where, exactly, to enter this information in the software. I normally enter RET when I enter Form 1098, because as a co-op owner, my RET is reported on Form 1098 along with the interest for the co-op's underlying mortgage. That form itemizes the gross RET along with both the STAR credit and the co-op tax abatement, and I typically enter the net amount (RET - STAR - abatement) in the real-estate taxes paid box when I enter my Form 1098.
Since this year's special state and city rebates checks were sent separately and were not paid through the co-op, and since they do not appear on Form 1098, I'm not sure whether I should adjust the Form 1098 amount (RET - STAR - abatement - state rebate - city rebate), or whether I should report only what's actually shown on the Form 1098 when I enter that form, and then enter the rebates elsewhere in the software.
Any advice?
