The FTB has stated that IT WILL REQUIRE PARCEL NUMBERS on your 2012 tax returns. It is the government's way of chipping away at your deductions. Now they want to reduce your property tax deduction.
The FTB website has posted a sample of a property bill that says which items are "generally deductible" or "generally nondeductible". Generally taxes based on an assessed value of the property are NOT deductible if the tax is for a local benefit that increases the value of the property. EXCEPTIONS TO THIS RULE INCLUDE EXPENSES FOR MAINTENANCE, REPAIR, OR THE INTEREST PORTION OF LOCAL BENEFIT TAX.
This is the FTB explanation.
Now here is the crazy part. The FTB suggests you contact the local assessment district to get further information. GOOD LUCK. Spidell Publishing in Los Angeles tried calling three different special assessment numbers: 1) a school district which told them to call the CPA, 2) another district with a recorded outgoing message and no message could be left, and 3) a third call was rerouted to a law firm which routed them to the county which rerouted them to the number on the bill.
The IRS General Counsel Memorandum (GCM) said that "like rate" does not mean "ad valorem" and concludes that, even though not based on the value of the property, special taxes (Mello-Roos) are still determined by a "like-rate". THIS MEANS THEY MAY BE DEDUCTIBLE.
Spidell Publishing has posted the IRS decision. http://www.caltax.com/spidellweb/public/editorial/MelloRoos.pdf
The California FTB says the IRS is General Counsel is incorrect. Spidell has requested the FTB obtain a written ruling from the IRS. But a reduced tax deduction means more money for California. The FTB is just shaking us up. They know the rules are poorly defined, the know the information is impossible to get. THANK YOU CALIFORNIA !
