The California rural area fire prevention fee not tax deductible
The IRS’s Office of General Counsel said the California rural area fire prevention fee is not tax deductible. The IRS said that the fee didn’t qualify as a deductible real property tax because it was imposed only against specific property to provide a local benefit. It also was imposed only against property in areas where the state provided fire protection services, not on all property within the state’s jurisdiction. And it did not qualify as a deduction because it was not based property value or structure size — instead, the $150 fee was imposed against each structure no matter how large or small.
The IRS Office of Chief Counsel Internal Revenue Service Memorandum Number: 201310029 goes into more detail. http://www.irs.gov/pub/irs-wd/1310029.pdf
The memorandum states:
California residents may not deduct the Fire Prevention Fee as a real property tax deduction because (i) the fee is not a tax under California or federal law (ii) the fee is not levied at a like rate, (iii) the fee is not imposed throughout the taxing authority’s jurisdiction, and (iv) the fee is assessed only against specific property to provide a local benefit.”
The total cost and value of real estate is a complicated subject. The tax code can help enhance the value of real estate but it changes. And it may not always change in a way that is fair to the property owner. Governments are finding sources of money for the short term and may not fully understand the long term effect of their action.
If you are looking for rural property or investment property contact HousingSacramento.com and speak to a knowledgeable real estate professional.
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