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Are property taxes on raw land deductible for a real estate business on form 1065?

I am filling form 1065 for my LLC which is a real estate investment and service company which currently holds raw land that is valued at approximately $1 Million. We have paid $10,000 in property taxes in 2008 and was wondering whether this expense would be considered deductable as a business expense?

1 Answer

  • 1 decade ago
    Favorite Answer

    A little complicated, and hard to answer without knowing more information.

    If it is just held as an investment and doesn't generate any income what you would do is actually capitalize the amount paid for taxes (which basically means add it to the basis of the land).

    If your generating some revenue, such as rent or perhaps using the land for some kind of farming activity then you may offset the income with the property tax expense.

    Hope this helps a little.

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