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Can I claim Real Estate Taxes and Stormwater Management Fees, paid quarterly through escrow by my lender, to my city? If so, where do I claim?

 
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3 Replies
PaulaM
Employee Tax Expert

Can I claim Real Estate Taxes and Stormwater Management Fees, paid quarterly through escrow by my lender, to my city? If so, where do I claim?

You can claim the real estate taxes paid through your escrow account to your county taxing authority. If the stormwater management fee is calculated as a percentage of your home's value, then it would be a deductible expense.

If it is a flat fee, then it is not deductible. To enter the real estate taxes:

  • In your open return, select My Account
  • Tools
  • Topic Search
  • Type 'property tax' in the box, then select GO
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Dmusyt
New Member

Can I claim Real Estate Taxes and Stormwater Management Fees, paid quarterly through escrow by my lender, to my city? If so, where do I claim?

How do I know whether it’s a flat fee

Can I claim Real Estate Taxes and Stormwater Management Fees, paid quarterly through escrow by my lender, to my city? If so, where do I claim?

First, I would add an exception to what @PaulaM said.  Flat fees are sometimes deductible if they provide a community benefit rather than a property-specific benefit.  This is most easily found in the dispute between the IRS and California over "Mello-Roos" taxes, where the IRS position is that a flat fee is deductible if it provides a general community benefit and not a property-specific benefit.  (This is in contrast to some of their other written guidance but there is a definite IRS document that says this. I don't have a link right now.)  

 

And fees based on the value of the property are not always deductible.

 

The general rule is that items on your bill that provide general community benefits are deductible.  This is most real estate taxes, which go to pay for community and government services, of course.  And most of the time, these taxes are based on the assessed value of the property.  Sometimes your bill may include other items specific to your property or neighborhood.  Such as, an assessment to pay for sidewalk repairs, that is only charged to homes with sidewalks and not everyone in the town or city has a sidewalk.  Or, an assessment for street lights.  Or if your waste water treatment (sewer) is charged on your tax bill instead of your water bill.  Those are benefits to specific properties, not the community, and not deductible, no matter if they are charged as a flat rate, or a percentage of value.

 

Flat rate fees can be deductible if they are charged alike to everyone in the community and provide for a community benefit, even though they are not charged as a percentage of assessed value.  

 

For your storm water fees, or any other items, you would need to read your bill carefully or contact your local assessor's office if you need help understanding your bill.  Generally, if your street or neighborhood pays such fees but houses on other streets do not (perhaps due to their location in relation to the drainage basin) then the fees aren't deductible.  If everyone under the taxing locality (town or county) pays the same, they probably are deductible.

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