@Hi Palms wrote:
There is no rule allowing a beneficial owner to deduct the taxes.
Tax court cases have permitted the deduction when taxpayers have proved they are equitable owners of the property on which they have paid property taxes imposed by local goverments.
The problem is that the treasury regulations specifically say that equitable owners may deduct mortgage interest, but taxes can only be deducted by persons with an "interest" that incudes "fee-ownership and co-ownership." §1-163.1 and §1-164.4. If the Tax Courts have extended the equitable ownership rule, they are going outside the regulation (which they are allowed to do -- but on the other hand, Tax Court rulings do not create binding precedent on other Tax Court judges.) And if such cases go before the court it means that auditors are (at least sometimes) denying the deduction, which forces the taxpayer to take it to court.
However, I agree there is at least a good argument for deducting the tax in spite of the regulation. I would like to read at least one of the cases if you have a citation available.
