Can One Offset Rental Property Income with Land Investment Property Tax?

Home Fairmark Forum Taxation of Investments Can One Offset Rental Property Income with Land Investment Property Tax?

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    fairira
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    As an investment a Texas resident owns an unimproved and unproductive Texas lot with no income. For years prior to 2018 the lot’s mortgage loan interest was carried forward as disallowed investment interest on Form 4952. The lot’s property tax was deducted on his Schedule A but the owner will be unable to do so for 2018 because of already meeting the SALT $10,000. limit.

    He also owns a California rental house whose income and expenses are reported on a Schedule E. The types of property that can be listed on Schedule E include “land” but perhaps that is only for land that is rental property which his Texas lot is not.

    Q. 1: As well as listing the California rental property on the Schedule E, would it be OK to also list the Texas lot and its property tax expense to reduce the taxable amount of his California rental property income?

    Q. 2: If not OK, are there any other ways to avoid losing the investment lot’s property tax as a deduction other than listing it as a Schedule A deduction or capitalizing it?

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