Beginning with the filing of your California tax return for 2012, you are required to file an itemized report on any real estate tax deductions you claim, as well as include the parcel number and amounts that can or cannot be deducted.

Deductions may be claimed for state, local and foreign real estate taxes based on the property’s assessed value, called ad valorem taxes. Charges on the tax bill unrelated to property taxes and local government maintenance of offsite improvements are not deductible.

Deductions may not be claimed for:

• amounts included in the tax bill for local benefits which increase the value of the parcel assessed;
• special assessments and fixed charges such as assessment district bond payments and zoning violation fees and penalties;
• itemized charges for services incurred in maintenance on the site of the parcel;
• transfer taxes or stamp taxes; and
• rent increases due to property tax increases.

Amounts billed with property taxes for benefits locally received are deductible if they are for the maintenance, repair or interest charges related to offsite improvements such as sidewalks, streets, water lines, sewer lines, irrigation and other similar improvements. This excludes local offsite improvements that increase the value of the property (and thus its assessed value).

To analyze your local county property tax bill, look up a sample tax bill for each county from the Franchise Tax Board’s (FTB’s) webpage, Understanding the Real Estate Tax Deduction.

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