@Severnaenc2 wrote:
We are required to pay an annual water and sewer facility charge of $580. Can I deduct that cost?
Possibly, but it's complicated.
Deductible property taxes are taxes that are assessed equally on all homes in the same city or area, to pay for general municipal services. Fees for services specific to your property are not deductible, as the other expert stated.
However, this can get complicated, especially in states like California that have a property tax cap, which causes cities to add "fees" for municipal services that don't count as "property taxes" for purposes of the property tax cap. These fees may still be deductible property taxes in the eyes of the IRS. You will often read that property taxes must be ad valorem, meaning charged based on the value of each individual property. While this is true, some flat rate charges may still be deductible property taxes even though they are not ad valorem, as long as they pay for general municipal services that applies to everyone. ("Mello-Roos" taxes being one example.)
If you pay $580 for the privilege of connecting to water and sewer, and your actual usage is billed separately, and every home in your city pays the same $580, that is a deductible property tax, because it is paying for general municipal services that benefit everyone. If some homes don't have water and sewer, or if this is based on your home's usage, then it is not a deductible property tax even if it is included on your property tax bill.
