Schedule CA (540), California Adjustments - Residents Real Estate Tax Deduction
We are in the process of updating the 2011 Schedule CA (540), California Adjustments - Residents. We added line items to the schedule and updated the instructions to help taxpayers compute the correct deduction amount for real estate tax. We also are developing a web page to provide additional information.
Real estate tax is an allowable itemized deduction for both federal and state income tax. In general, the allowable deduction amount should be based only on the assessed value of the taxpayers’ property. Special assessments included in the property tax bill, such as Mello-Roos or for various service charges provided to specific properties, are generally not allowable deductions for income tax purposes.
California differs from most other states in that many California property tax bills include large special assessments that are not allowable deductions. However, California does conform to federal law regarding the real estate tax deduction. Therefore, taxpayers should use the same real estate deduction amount on both their federal and state tax returns. This new information reporting is intended to help taxpayers properly report their real estate tax deduction.
Give your comments or suggestions about this schedule by September 30, 2011.