Page 7

rate on all real property throughout the community, and the proceeds are used for general community or governmental purposes. Pub. 530 explains the deduc- tions homeowners can take. Don't include the following amounts on line 6. Itemized charges for services to specific property or persons (for exam- ple, a $20 monthly charge per house for trash collection, a $5 charge for every 1,000 gallons of water consumed, or a flat charge for mowing a lawn that had grown higher than permitted under a lo- cal ordinance). Charges for improvements that tend to increase the value of your prop- erty (for example, an assessment to build a new sidewalk). The cost of a property improvement is added to the basis of the property. However, a charge is deductible if it is used only to main- tain an existing public facility in service (for example, a charge to repair an exist- ing sidewalk, and any interest included in that charge). If your mortgage payments include your real estate taxes, you can deduct only the amount the mortgage company actually paid to the taxing authority in 2017. If you sold your home in 2017, any real estate tax charged to the buyer should be shown on your settlement statement and in box 6 of any Form 1099-S you received. This amount is considered a refund of real estate taxes. See Refunds and rebates, later. Any real estate taxes you paid at closing should be shown on your settlement statement. You must look at your real es- tate tax bill to decide if any nondeductible itemized charges, such as those listed earlier, are included in the bill. If your taxing authority (or lender) doesn't furnish you a copy of your real estate tax bill, ask for it. Prepayment of next year's property taxes. Only taxes assessed and paid in 2017 can be deducted for 2017. State or local law determines whether and when a property tax is assessed, which is gen- erally when the taxpayer becomes liable for the property tax imposed. Refunds and rebates. If you received a refund or rebate in 2017 of real estate taxes you paid in 2017, reduce your de- duction by the amount of the refund or rebate. If you received a refund or rebate CAUTION ! in 2017 of real estate taxes you paid in an earlier year, don't reduce your deduc- tion by this amount. Instead, you must include the refund or rebate in income on Form 1040, line 21, if you deducted the real estate taxes in the earlier year and the deduction reduced your tax. See Recoveries in Pub. 525 for details on how to figure the amount to include in income. Line 7 Personal Property Taxes Enter the state and local personal prop- erty taxes you paid, but only if the taxes were based on value alone and were im- posed on a yearly basis. Example. You paid a yearly fee for the registration of your car. Part of the fee was based on the car's value and part was based on its weight. You can deduct only the part of the fee that was based on the car's value. Prepayment of next year's property taxes. Only taxes assessed and paid in 2017 can be deducted for 2017. State or local law determines whether and when a property tax is assessed, which is gen- erally when the taxpayer becomes liable for the property tax imposed. Line 8 Other Taxes If you had any deductible tax not listed on line 5, 6, or 7, list the type and amount of tax. Enter only one total on line 8. Include on this line income tax you paid to a foreign country or U.S. possession. You may want to take a credit for the foreign tax instead of a deduction. See the instructions for Form 1040, line 48, for details. Interest You Paid The rules for deducting interest vary, de- pending on whether the loan proceeds are used for business, personal, or in- vestment activities. See Pub. 535 for more information about deducting busi- ness interest expenses. See Pub. 550 for more information about deducting in- vestment interest expenses. You can't deduct personal interest. However, you can deduct qualified home mortgage in- TIP terest (on your Schedule A) and interest on certain student loans (on line 33 of your Form 1040), as explained in Pub. 936 and Pub. 970. If you use the proceeds of a loan for more than one purpose (for example, personal and business), you must allo- cate the interest on the loan to each use. However, you don't have to allocate home mortgage interest if it is fully de- ductible, regardless of how the funds are used. You allocate interest (other than fully deductible home mortgage interest) on a loan in the same way as the loan is allo- cated. You do this by tracing disburse- ments of the debt proceeds to specific uses. For more information on allocating interest, see Pub. 535. In general, if you paid interest in 2017 that applies to any period after 2017, you can deduct only amounts that apply for 2017. Use Schedule A to deduct qualified home mortgage interest and investment interest. Lines 10 and 11 Home Mortgage Interest If you are a homeowner who re- ceived assistance under a State Housing Finance Agency Hard- est Hit Fund program or an Emergency Homeowners' Loan program, see Pub. 530 for the amount you can deduct on line 10 or 11. A home mortgage is any loan that is se- cured by your main home or second home. It includes first and second mort- gages, home equity loans, and refi- nanced mortgages. A home can be a house, condomini- um, cooperative, mobile home, boat, or similar property. It must provide basic living accommodations including sleep- ing space, toilet, and cooking facilities. Limit on home mortgage interest. If you took out any mortgages after Octo- ber 13, 1987, your deduction may be limited. Any additional amounts bor- rowed after October 13, 1987, on a line-of-credit mortgage you had on that date are treated as a mortgage taken out after October 13, 1987. If you refi- nanced a mortgage you had on October 13, 1987, treat the new mortgage as taken out on or before October 13, 1987. TIP A-7