|La Jolla means "The Jewel." It is located 12 miles north of Downtown San Diego.|
Thursday, August 9, 2012
Romney and Property Tax Deductions
The Los Angeles Times reports that Mitt and Ann Romney received a property tax readjustment downwards on a La Jolla (San Diego) home they purchased in 2008 for $12 million. Per the report, they now save about $109,000 annually in property taxes. [Romneys, caught in housing bust, got tax cut in La Jolla," 8/5/12]
Their 2010 tax return reports they paid $226K of real estate taxes (Schedule A). They also owed AMT so likely did not get any benefit of the taxes on their federal return. But without the AMT, the federal deduction for the property taxes would provide up to a 35% tax savings for the Romneys. I have asked the question before and will again, why should the income tax subsidize the expenses of this second home? (See 5/3/12 post.)
Many people (including me) call for repeal of the AMT. That will cost over $70 billion per year. One way to pay for it would be to repeal the property tax deduction on second (and third and more) homes, as well as cap the deduction for a principal residence based on the median home value for the particular region, for example.
Some tax planning for the Romneys - take the $109K savings and donate it to the State of California. That deduction is also allowed for regular tax and AMT. Which points out another revenue offset likely needed for when AMT is repealed, a limitation on the charitable contribution deduction. Perhaps only allowing deductions for donations that exceed some percentage of one's income.
What do you think?