Personal Property Tax

Debbie Upton owns four cars that she hires out for use in her Uber fleet business. She paid registration fees totaling $1,500 (based on value) for her four business vehicles. Debbie was excited about the prospect of being able to deduct these costs. Unfortunately, since Debbie deducts vehicle costs for her fleet based on the standard mileage rate, she is not allowed to deduct any portion of the $1,500 of personal property taxes on her Schedule C.

Dunlap Phish, is an author and avid sailor based out of Fort Lauderdale, Florida. Infact, Mr. Phish finds much of his inspiration to write when he is out at sea for long periods of time. Last July, Dunlap received a bill from the city of Fort Lauderdale for taxes on his boat, the only problem was that since Dunlap was out at sea for months working on his newest novel he didn't see the letter or pay the tax until February of the following year. When he prepares his tax return in April he will not be allowed to deduct any portion of the property tax on either his Schedule C or his Schedule A since he did not remit payment to the taxing authorities until February of the current year.

Lucy Abigail rented her guest house in Death Valley through Airbnb for 183 days last year. In preparation for the summer, in March she purchased an industrial HVAC unit for her guest house, which the county imposed $4,000 of personal property taxes on. Lucy will be able to deduct 50% (183/365) of the personal property tax on line 16 of her Schedule E (to the extent allowed), and the remaining 50% on line 7 of her Schedule A, assuming she itemizes her deductions.

Alex Welbeck is the founder of a small co-working space in Philadelphia, PA. Last year Alex purchased $5,000 of furniture while building out his coworking space. In March he paid the city a 2% personal property tax on these assets. Next year when Alex prepares his tax return for the current year, he will be able to deduct the $100 of personal property tax on line 23 of his Schedule C.