You make the callBy: NATP Research
November 22, 2023

Question: Bill and Ted have each been tenant-stockholders in their local housing cooperative, The Excellent House, for many years. Part of the monthly maintenance fees they pay are applied towards the co-op’s annual real estate taxes. Bill and Ted recently heard that these taxes are not subject to the state and local tax (SALT) limitation, which is currently $10,000. Therefore, the taxes could be potentially deducted using Schedule A (Form 1040), Itemized Deductions, in addition to other state and local taxes, despite the $10,000 limit. Is this true?

Answer: No. Deductions for the co-op’s real estate taxes are covered under §216(a)(1), which indicates taxes are still subject to the SALT limitations.

The Joint Committee on Taxation said, “[i]t is intended that the limitation apply to the deduction for amounts paid or accrued to a cooperative housing corporation by a tenant-stockholder under section 216(a)(1) (relating to real estate taxes) in the same manner as the limitation applies to real estate taxes under section 164.” Joint Committee on Taxation Staff, General Explanation of Public Law 115-97, JCS-1-18 p. 68 (December 2018).

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Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.

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