Is property tax tax-deductible?

[beezer137]

What is the name of your state? Illinois

I own a house. I am renting my basement out to a tenant for $250/month, which I calculated to be 1/3 of the total house, by floor surface area. As a result, 1/3 of my mortgage is tax deductible as is 1/3 of my utilities.

However, as interest on my mortgage is always entirely tax deductible (whether or not I was renting out my basement), I have to subtract out the interest paid from my total house payments, itemize the total interest as one deduction, then itemize 1/3 of my remaining mortgage as another deduction.

Here's a stupid question: Is property tax always tax deductible as well, in the same way as mortgage interest is always tax deductible?

If so, then the entire amount I paid in property tax can be deducted, otherwise, only 1/3 of the amount can be deducted as a business expense for renting out the basement.

[Shay-Pari'e]

[url]http://forum.freeadvice.com/member.php?u=273278[/url]

And the truth is?

[Snipes5]

You can't deduct your MORTGAGE. Only your mortgage interest. This you can do whether you are renting it out or not. Same with the property taxes.

Snipes

[LdiJ]

Originally Posted by beezer137

What is the name of your state? Illinois

I own a house. I am renting my basement out to a tenant for $250/month, which I calculated to be 1/3 of the total house, by floor surface area. As a result, 1/3 of my mortgage is tax deductible as is 1/3 of my utilities.

However, as interest on my mortgage is always entirely tax deductible (whether or not I was renting out my basement), I have to subtract out the interest paid from my total house payments, itemize the total interest as one deduction, then itemize 1/3 of my remaining mortgage as another deduction.

Here's a stupid question: Is property tax always tax deductible as well, in the same way as mortgage interest is always tax deductible?

If so, then the entire amount I paid in property tax can be deducted, otherwise, only 1/3 of the amount can be deducted as a business expense for renting out the basement.

I think there is a chance that you are confused. As Snipe said, your mortgage interest and property taxes are deductible. The principal on your mortgage is not. However you don't get to deduct any portion of them twice. You can either deduct them completely on your schedule A, and leave them off the Schedule E, or you can deduct 1/3 on your schedule E, and the remaining 2/3rds on your schedule A.