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Itemized Deductions Schedule-A


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Old 03-24-2018, 12:48 PM
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Allocation of Property Tax Deduction

Three people own a vacation home through an LLC. LLC members A & B own 25% and member C owns 50%. All three members pay equally in to the operating fund to pay the bills. (utilities, maintenace, taxes, insurance, etc.) All three members are allowed to deduct their share of the property taxes on their personal income tax returns. The question is what is the proper allocation of the property tax deduction? Is it one-third for each member (since each member paid one-third of the tax), or should it be proportional to ownership (25-25-50)?



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Old 03-25-2018, 11:50 PM
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Three people own a vacation home through an LLC. LLC members A & B own 25% and member C owns 50%. All three members pay equally in to the operating fund to pay the bills. (utilities, maintenace, taxes, insurance, etc.) All three members are allowed to deduct their share of the property taxes on their personal income tax returns. The question is what is the proper allocation of the property tax deduction?=====================>>basically you may follow the llc?s Operating Agreement setting out the 'rules' of your company; however it is up to you and the partners. For jointly/commonly owned property, you are entitled to deduct the actual amount of interest or taxes that you paid. If you and your partner contribute equally to the expenses, you can each take 50 % of the deduction. Often, however, dividing the deductions will result in the highest total tax, because neither partner will have enough to itemize. In many cases it is most advantageous for the person with the highest income to take all the deductions, which will provide the biggest decrease in taxable income.

Is it one-third for each member (since each member paid one-third of the tax), or should it be proportional to ownership (25-25-50)?===>As mentioned above; it is up to you an d your partners.



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