Can I also do this as a renter of real estate that pays property tax through my landlord? If we change the lease agreement so that it specifically states that I am responsible for the property tax? See example below:
Lets say my rent is $1000 a month and my landlord pays $2400 a year in property taxes for my unit. So each month, about $200 of my rent goes towards property taxes.
We decide to make a new lease agreement, where it specifically states that I am responsible for paying this $200 in property taxes and the other $800 in rent. But, in practice, I still just give my landlord $1000 every month and they use it to pay the property taxes (this is the same way it is done with some car lease companies). I get a receipt that says $200 is for taxes and $800 for rent.
From the landlord point of view, their finances do not change. Whether they want to claim that $200 as income and then deduct later, or they never claim it at all, their profit and taxable income is the same, correct? And, with respect to tax liability, they seem to gain an advantage. If I don't pay them, they can tell the IRS to come after me. Or, they can just keep paying the property taxes and use the lease agreement to evict me and get their money that way. It seems like they just gain an option to leave it to the IRS.
From the tenant point of view, the only financial change is that I now have the option to include these property taxes in itemized deductions. My monthly expenses do not change. The only disadvantage may be with respect to tax liability. Now, if I don't pay, the IRS could come after me. However, I was already essentially liable for this $200 in the previous setup with the very real consequence of eviction. So, if I don't pay and get evicted, whether the landlord and the IRS come after me, or just the landlord, the total amount I would owe would be the same. So, why would I care who's coming after me?
This seems like a win win, is it allowed? If so, why is it not more common? Rents/property taxes are pretty high in big cities, could help out a lot of renters...
