Question

Peter and Shaline Johnsen moved into a home in a new subdivision. Theirs was one of the first homes in the subdivision. During the year, they paid $1,510 in real property taxes to the state government, $505 to the developer of the subdivision for an assessment to pay for the sidewalks, and $910 for real property taxes on land they hold as an investment. What amount of property taxes are the Johnsens allowed to deduct assuming their itemized deductions exceed the standard deduction amount before considering any property tax deductions and they pay $5,050 of state income taxes for the year and no other deductible taxes

Answer 1

Answer:

$2420

Explanation:

From 2018, If itemized, total annual allowable limit for State and local taxes is capped at $10,000

Although as separate allowable property tax is ( 1510 + 910) = $2420

Development cost is not a property tax amount.

Therefore, deductible property taxes amount, lessor of follow:

                                                             (10000-5050)               $ 4,950

                                                   or:                                           $ 2,420