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Level 2

Property Tax Lien Deduction for Small Business

How can my mom deduct a -$108,000 property tax lien payment made in 2020 from her 1065 tax return for her 1065 partnership (small business)? Details below:


1.) Property title is in mothers name, nobody claims the property as primary residence, no other tenants besides the small business. Everybody is in NJ.

2.) Small business is a partnership 50/50 split between mom/dad.

3.) Small business resides on the property.


Would the property tax lien payment be included on her individual tax return, which would only allow -$10,000 deduction? Or can it be included as part of her 1065 small business return as an expense/deduction/loss and offsets revenues.

Thank You

2 Replies
Level 9

Property Tax Lien Deduction for Small Business

Does your mom rent this property to the partnership? If she does why isn't she putting this whole thing on SCH E where the SCH A limitation is not an issue?

Level 2

Property Tax Lien Deduction for Small Business

No there is no formal rental agreement to the partnership. Basically, the building title is under her name and she paid the property taxes and tax lien thru her checking account, and that partnership business is located inside the building.

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