Front foot fee

[rajesh]

Normally in Maryland Property tax charged by county consists of Front
foot fee in addition to normal property taxes. These are tax
deductible as it comes as part of 1099 issued by Mortgage company.
These charges are for extending water, sewer lines to the property. In
my new construction area the county has allowed builders to use their
own collection companies to collect them. Seems county wants to get
out of the business of collecting these charges as they are really
incurred by builders or who ever doing such work. These are normally
for 23 years. Will these be tax deductible even tough paid to private
collection agencies?

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[Phil Marti]

On Nov 10, 1:34 am, rajesh wrote:

> Normally in Maryland Property tax charged by county consists of Front
> foot fee in addition to normal property taxes.

It may be "normal" on your bill, but not on mine, where there's no
such charge.

> These are tax
> deductible as it comes as part of 1099 issued by Mortgage company.

Nothing is deductible because it's on the form the lender sends you.
All that shows is how much the lender paid the taxing authority. You
have to look to your tax bill to see what's deductible. Only taxes
based on the value of the property and applicable to all properties
are deductible as property taxes. See IRS Publication 17.

> These charges are for extending water, sewer lines to the property. In
> my new construction area the county has allowed builders to use their
> own collection companies to collect them. Seems county wants to get
> out of the business of collecting these charges as they are really
> incurred by builders or who ever doing such work. These are normally
> for 23 years. Will these be tax deductible even tough paid to private
> collection agencies?

No, they're not dedutible for the reasons stated above. They add to
your basis in the property. In my new construction area there was a
separate lien payable to the utility lender for 30 years.

Phil Marti
VITA/TCE Volunteer
Clarksburg, MD

[Bill Brown]

On Nov 10, 4:49 am, Phil Marti <prm20...@verizon.net> wrote:
> On Nov 10, 1:34 am, rajesh wrote:
>
> > Normally in Maryland Property tax charged by county consists of Front
> > foot fee in addition to normal property taxes.

It may be that it is a good thing this isn't a fee based on value
since we've been told since childhood that we should "put our best
food forward" which implies making our more valuable foot be our front
foot .

... Oh, wait. That's not it...


Phil's right. This water & sewer lines extension fee adds to basis and
is not currently deductible.

[scott s.]

Bill Brown <w.p.br...@gmail.com> wrote in
news:e145816f-87e0-4f2a...@f29g2000yqa.googlegroups.com:

> On Nov 10, 4:49 am, Phil Marti <prm20...@verizon.net> wrote:
>> On Nov 10, 1:34 am, rajesh wrote:
>>
>> > Normally in Maryland Property tax charged by county consists of
>> > Front foot fee in addition to normal property taxes.
>
> It may be that it is a good thing this isn't a fee based on value
> since we've been told since childhood that we should "put our best
> food forward" which implies making our more valuable foot be our
> front foot .
>
> ... Oh, wait. That's not it...
>
>
> Phil's right. This water & sewer lines extension fee adds to basis
> and is not currently deductible.
>

Just confirming, in my case (Anne Arundel County) there has never been
such a charge in our property tax bill. There has been a separate bill
for sewage capital expense from City of Annapolis. IIRC both bills
were paid out of escrow account required as condition to our house
purchase note, but that of course isn't a tax deduction determination.

scott s.
..

[Arthur Kamlet]

In article <Xns9F996E898E34A...@216.168.3.70>,

scott s. <75270...@csi.xcom> wrote:
>Bill Brown <w.p.br...@gmail.com> wrote in
>news:e145816f-87e0-4f2a...@f29g2000yqa.googlegroups.com:
>
>> On Nov 10, 4:49 am, Phil Marti <prm20...@verizon.net> wrote:
>>> On Nov 10, 1:34 am, rajesh wrote:
>>>
>>> > Normally in Maryland Property tax charged by county consists of
>>> > Front foot fee in addition to normal property taxes.
>>
>> It may be that it is a good thing this isn't a fee based on value
>> since we've been told since childhood that we should "put our best
>> food forward" which implies making our more valuable foot be our
>> front foot .
>>
>> ... Oh, wait. That's not it...
>>
>>
>> Phil's right. This water & sewer lines extension fee adds to basis
>> and is not currently deductible.
>>
>
>Just confirming, in my case (Anne Arundel County) there has never been
>such a charge in our property tax bill. There has been a separate bill
>for sewage capital expense from City of Annapolis. IIRC both bills
>were paid out of escrow account required as condition to our house
>purchase note, but that of course isn't a tax deduction determination.

As has been stated by others, this is not a deductible tax, but
is an addition to cost basis of the property.
--

ArtKamlet at a o l dot c o m Columbus OH K2PZH

[Gene E. Utterback, EA, RFC, ABA]

"rajesh" <puri...@gmail.com> wrote in message
news:52df9bd7-15f3-4d9d...@s9g2000yqi.googlegroups.com...

> Normally in Maryland Property tax charged by county consists of Front
> foot fee in addition to normal property taxes. These are tax
> deductible as it comes as part of 1099 issued by Mortgage company.

Not so fast, Rajesh - just because its on the 1098 (NOT a 1099) doesn't mean
its right. Some counties in Maryland also include a REFUSE or TRASH fee on
the property tax bill, that isn't deductible either. And neither is the
Front Foot Assessment.

> These charges are for extending water, sewer lines to the property.

Correct - they are how the county recoups the cost of extending those
utilities to your home. A few years back Anne Arundel County offered "NEW"
home buyers an option in at least 2 neighborhoods - pay a discounted amount
up front and never see that Front Foot Assessment on your property tax bill
again OR forego the upfront payment and spread the cost over several years.
I don't recall the exact details, but 23 years sounds about right.

> In my new construction area the county has allowed builders to use their
> own collection companies to collect them. Seems county wants to get
> out of the business of collecting these charges as they are really
> incurred by builders or who ever doing such work. These are normally
> for 23 years. Will these be tax deductible even tough paid to private
> collection agencies?

Keep in mind that in order for a tax to be deductible it has to be based on
the VALUE of item it is assessed against. Drivers in Virginia get to deduct
part of the car registration because they pay personal property tax to VA
based on the value of the car. Here in Maryland your registration fees are
based on the car's GVW or GVWR. This has nothing to do with the value of
the vehicle so it isn't deductible here.

FFAs work the same way. When your subdivision was developed someone
incurred the cost of providing hook up to certain public utilities. The
costs of those hooks are now either being recouped OR a sinking fund was
established to provide for their eventual replacement - neither of which has
anything to do with the value of the house or property. Hence, Front Foot
Assessments, like Trash/Refuse/Dump fees, are NOT deductible.

Gene E. Utterback, EA, RFC, ABA