PILOT deductions?

[DaveKCMO]

just wondering if anyone has successfully deducted PILOTs on their tax return? if you haven't heard, it's a scam the city runs when property taxes have been abated... they send you bill at the end of the year for "Payment In Lieu of Taxes" (which, in essence, is actually a tax). i actually paid mine, but i've known others who've had theirs paid by their HOA (hence, no logical deduction).

anyone?

[dangerboy]

Scam???  WTF?  It's a very legitimate thing. 

PILOTs (Payments in Lieu of Taxes) serve to replace some of the tax revenue that is lost when private companies are granted tax abatements, especially TIFs.  School districts are the biggest losers in this, as well as libraries, community colleges, and others.  It's a bone thrown to them for a bizarre system where one government (a city) is able to give away tax revenue meant for completely separate jurisdictions like school districts.

I didn't know residents of tax abated housing were subject to PILOTs, I thought the developer paid these...

[DaveKCMO]

Scam???  WTF?   It's a very legitimate thing.

my bad. i was primarily referring to the apparent contradiction... it is a tax, but called a payment IN LIEU of tax. i guess it would sound silly though to say "tax in lieu of tax". now my brain hurts. regardless, it was never mentioned to me by anyone during the sales process.

I didn't know residents of tax abated housing were subject to PILOTs, I thought the developer paid these...

so did we all get screwed? the letter i received from the city was addressed to me with my unit number.

surely someone else on this thread owns a tax-abated property and has a story to tell!

[CrossroadsKid]

With PIEA abatement, you pay only the taxes on the underlying land, not any "improvements", meaning the building.  The pilot is the difference b/w the building value as of the date of the freeze, ie pre-remodel, and the value of the underlying land.  It is confusing and not explained very well most of the time, but DaveKCMO, this is what the case with you is.

[dangerboy]

PILOTs also vary between developments.  They are negotiated case-by-case, and not every development is subject to PILOTs.

[DaveKCMO]

thanks for the info, guys!

now back to my original question... have others successfully deducted these PILOTs as real estate taxes on their income tax returns? i'm itemizing...

[Slappy the Wang]

thanks for the info, guys!

now back to my original question... have others successfully deducted these PILOTs as real estate taxes on their income tax returns? i'm itemizing...

You should be able to.  It's simply the schools portion of the tax bill and maybe fire/safety as well.  If there were no abatements, you'd be deducting them anyway.

[CrossroadsKid]

I think you most likely can.  The IRS tax code allows for real property taxes to be deducted, which you already know.  The IRS regs state that "the term "real property tax" means an ad valorem tax which is imposed  on interests in real property and levied for the general public welfare, but it does not include taxes assessed against local benefits" IRS reg. 1.164-3.  Taxes for local benefits are what are generally called special assessments and go toward, say, roads and sewers in a defined area.  Since this is basically a tax and goes to the general fund most likely, I would think it would be deductible.

[dangerboy]

One of the realtors that specialize in downtown condos might know, as might the developer of your building or your condo association.

[MidWestSider]

just wondering if anyone has successfully deducted PILOTs on their tax return? if you haven't heard, it's a scam the city runs when property taxes have been abated... they send you bill at the end of the year for "Payment In Lieu of Taxes" (which, in essence, is actually a tax). i actually paid mine, but i've known others who've had theirs paid by their HOA (hence, no logical deduction).

anyone?

How did that go Dave?  Did successfully deduct your PILOT?

[hawkgolfer]

At Western Auto our HOA paid the fee, but it is a substantial fee each year, so eventually or HOA dues are going to go up alot to offset these costs.  I guess our assoc wasnt aware of this until we got the huge bill!

[DaveKCMO]

How did that go Dave?  Did successfully deduct your PILOT?

i think i did... but i can't remember. i'm glad you bumped this thread because i haven't submitted my 2006 return yet. i'll go through my old emails, since i know i received a good answer.

anyway, this year our HOA paid the full amount for the building (since the city sent one bill for everyone). then the HOA billed each resident an amount based on their voting percentage in the association. mine was a paltry $97.

our dues have gone up every year, so future condo buyers should be aware of that possibility. when we started in '03, we had a very detailed 10-year budget so no one was really expecting yearly increases. it has, however, forced us into being more energy efficient (compact flourescent bulbs in the common areas saved us a fortune; we lowered the thermostat in the garage; and also were starting a recycling program until the city recently changed its tune). in short, even if you don't see dues hikes, get involved in your association to make sure they're being as efficient as possible with the shared resources.

[Moniker]

I have been told that the installation of a heat pump for a hybrid HVAC system can result in a tax abatement. So, does this mean I can use my personal property tax as a deduction and a separate field for tax abatement for the HVAC?

How do I calculate the amount of the abatement, if this is in fact true?

[DaveKCMO]

I have been told that the installation of a heat pump for a hybrid HVAC system can result in a tax abatement. So, does this mean I can use my personal property tax as a deduction and a separate field for tax abatement for the HVAC?

How do I calculate the amount of the abatement, if this is in fact true?

is this one of the new tax breaks for energy efficiency? if not, i have no idea what you're asking. also, i am absolutely not a tax professional.

[aknowledgeableperson]

I would assume that if you paid for the cost directly (bill sent to you and you paid for it out of your pocket) you could claim.  But if the HOA paid it too bad.  An example would be any property taxes the HOA pays for the common area.  You cannot claim your portion of it even though it is in your fees.

[DaveKCMO]

i found the email i received, confirming that PILOTs are consider real property taxes:

Summary: Rental payments in lieu of taxes (PILOTs) made by a residential
apartment cooperative to a corporation that was an agency of the state
were deductible as a "real property tax" to the extent that they were
not in excess of the real property tax that would have otherwise been
imposed by the city with respect to the co-op's building. Additionally,
the tenant-shareholders of the co-op were allowed to deduct their
proportionate share of the PILOT's as a "real property tax."