North Carolina Itemized Deductions

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Even though the federal itemized deduction for state taxes, including real estate property taxes, is limited to $10,000, North Carolina allows the full amount of real estate property taxes as an itemized deduction, up to a cap of $20,000 for the total of real estate property taxes and home mortgage interest.

My real estate property taxes are greater than $10,000, but the amount showing as the itemized deduction on my North Carolina return is only $10,000.

In 2018, your North Carolina software handled this correctly, but in 2019 it is not doing so.

When I go to the North Carolina forms, the $10,000 amount shown for real estate property taxes cannot be changed. Is this a bug in your NC software for 2019, or is there a way to have it flow correctly?

SteamTrainAnswer

Level 15

I haven't checked 2018.....but for 2019, NC does limit property taxes to 10,000.

And the 20,000 limit is for the total of Prop taxes (at 10,000 max) plus Mortgage interest.

Look at the lines 16-to-20 on your own D-400 Sched S again, and See the instructions for lines 16-to-20 on the Sched S, on page 18 of:

https://files.nc.gov/ncdor/documents/files/2019-D-401-Instructions_0.pdf

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

SteamTrainAnswer

Level 15

I haven't checked 2018.....but for 2019, NC does limit property taxes to 10,000.

And the 20,000 limit is for the total of Prop taxes (at 10,000 max) plus Mortgage interest.

Look at the lines 16-to-20 on your own D-400 Sched S again, and See the instructions for lines 16-to-20 on the Sched S, on page 18 of:

https://files.nc.gov/ncdor/documents/files/2019-D-401-Instructions_0.pdf

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

Retired GT PartnerAuthor

Level 2

Thank you for the reply.

It provided the answer, which is that the North Carolina rules now follow the federal one.

SteamTrain

Level 15

...and the 2018 instructions for that (page 18 of the 2018 instructions)...they do not indicate such a limitation:

https://files.nc.gov/ncdor/documents/files/2018_d-401_instruction_booklet.pdf

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So one wonders whether the 2018 NC instructions were followed as-is....i.e that TTax followed as not having a limitation......or whether maybe there should have been a notation, that NC missed including in their instructions for 2018, and a 10,000 limitation might have been in effect then too. IF it was limited for 2018, then, eventually, NC will figure it out and will issue letters to those individuals indicating some back-taxes due....if there is an actual error on that line for 2018.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*