9. I n year 1, Peter and Shaline Johnsen moved into a home in a new subdivision.
ID: 2559792 • Letter: 9
Question
9. In year 1, Peter and Shaline Johnsen moved into a home in a new subdivision. Theirs was one of the first homes in the subdivision. In year 1, they paid $4,200 in real property taxes to the state government, $1,440 to the developer of the subdivision for an assessment to pay for the sidewalks, and $1,420 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?
Deductible tax amount: $________________
Explanation / Answer
Deductible tax amount- $ 5,620
Johnsens can deduct $5,620 of property taxes as itemized deductions which includes 1)$4,200 paid in property taxes on their home and 2) $1,420 in property taxes paid on land. Taxpayers aren't allowed to deduct fees paid for assessments for local benefits such as streets and sidewalks. Thus, the Johnsens will not be able to deduct the $1,440 assessment fee to pay for sidewalks.
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