Instructions For Schedules A & B (Form 1040)

on its weight. You can deduct only the part

Line 6

Taxes You Paid

of the fee that was based on the car’s value.

Real Estate Taxes

Taxes You Cannot Deduct

Include taxes (state, local, or foreign) you

•

Line 8

Federal income and excise taxes.

paid on real estate you own that was not

•

Social security, Medicare, federal un-

used for business, but only if the taxes are

Other Taxes

based on the assessed value of the property.

employment (FUTA), and railroad retire-

If you had any deductible tax not listed on

Also, the assessment must be made uni-

ment (RRTA) taxes.

line 5, 6, or 7, list the type and amount of

•

formly on property throughout the commu-

Customs duties.

tax. Enter only one total on line 8. Include

nity, and the proceeds must be used for

•

Federal estate and gift taxes. But see

on this line income tax you paid to a foreign

general community or governmental pur-

the instructions for line 27 on page A-7.

country or U.S. possession.

poses. Pub. 530 explains the deductions

•

Certain state and local taxes, includ-

homeowners can take.

You may want to take a credit

ing: general sales tax (see Caution below),

Do not include the following amounts

for the foreign tax instead of a

TIP

tax on gasoline, car inspection fees, assess-

deduction. See the instructions

on line 6.

ments for sidewalks or other improvements

•

for Form 1040, line 47, for

Itemized charges for services to spe-

to your property, tax you paid for someone

details.

cific property or persons (for example, a

else, and license fees (marriage, driver’s,

$20 monthly charge per house for trash col-

dog, etc.).

lection, a $5 charge for every 1,000 gallons

of water consumed, or a flat charge for

Interest You Paid

mowing a lawn that had grown higher than

At the time these instructions

permitted under a local ordinance).

Whether your interest expense is treated as

went to print, Congress was

•

investment interest, personal interest, or

Charges for improvements that tend to

considering legislation that

business interest depends on how and when

increase the value of your property (for ex-

would extend the deduction for

you used the loan proceeds. See Pub. 535

ample, an assessment to build a new side-

state and local general sales taxes that ex-

for details.

walk). The cost of a property improvement

pired at the end of 2005. To find out if this

is added to the basis of the property. How-

legislation was enacted, and for more de-

In general, if you paid interest in 2006

ever, a charge is deductible if it is used only

that applies to any period after 2006, you

tails, go to , click on More

to maintain an existing public facility in

can deduct only amounts that apply for

Forms and Publications, and then on

service (for example, a charge to repair an

2006.

What’s Hot in forms and publications, or

existing sidewalk, and any interest included

see Pub. 553.

in that charge).

If your mortgage payments include your

Lines 10 and 11

real estate taxes, you can deduct only the

Line 5

amount the mortgage company actually

Home Mortgage Interest

paid to the taxing authority in 2006.

State and Local Income

A home mortgage is any loan that is se-

cured by your main home or second home.

If you sold your home in 2006, any real

Taxes

It includes first and second mortgages,

estate tax charged to the buyer should be

Include on this line the state and local in-

home equity loans, and refinanced mort-

shown on your settlement statement and in

come taxes listed below.

gages.

box 5 of any Form 1099-S you received.

•

This amount is considered a refund of real

State and local income taxes withheld

A home can be a house, condominium,

estate taxes. See Refunds and rebates be-

from your salary during 2006. Your

cooperative, mobile home, boat, or similar

low. Any real estate taxes you paid at clos-

property. It must provide basic living ac-

Form(s) W-2 will show these amounts.

ing should be shown on your settlement

commodations including sleeping space,

Forms W-2G, 1099-G, 1099-R, and

statement.

toilet, and cooking facilities.

1099-MISC may also show state and local

income taxes withheld.

Refunds and rebates.

If you received a re-

If you

Limit on home mortgage interest.

•

fund or rebate in 2006 of real estate taxes

State and local income taxes paid in

took out any mortgages after October 13,

you paid in 2006, reduce your deduction by

2006 for a prior year, such as taxes paid

1987, your deduction may be limited. Any

the amount of the refund or rebate. If you

additional amounts borrowed after October

with your 2005 state or local income tax

received a refund or rebate in 2006 of real

13, 1987, on a line-of-credit mortgage you

return. Do not include penalties or interest.

estate taxes you paid in an earlier year, do

•

had on that date are treated as a mortgage

State and local estimated tax pay-

not reduce your deduction by this amount.

taken out after October 13, 1987. If you

ments made during 2006, including any

Instead, you must include the refund or re-

refinanced a mortgage you had on October

part of a prior year refund that you chose to

bate in income on Form 1040, line 21, if

13, 1987, treat the new mortgage as taken

have credited to your 2006 state or local

you deducted the real estate taxes in the

out on or before October 13, 1987. But if

earlier year and the deduction reduced your

income taxes.

you refinanced for more than the balance of

•

tax. See Recoveries in Pub. 525 for details

Mandatory contributions you made to

the old mortgage, treat the excess as a mort-

on how to figure the amount to include in

gage taken out after October 13, 1987.

the California, New Jersey, or New York

income.

Nonoccupational Disability Benefit Fund,

See Pub. 936 to figure your deduction if

Rhode Island Temporary Disability Benefit

either (1) or (2) below applies. If you had

Fund, or Washington State Supplemental

more than one home at the same time, the

Line 7

Workmen’s Compensation Fund.

dollar amounts in (1) and (2) apply to the

total mortgages on both homes.

Personal Property Taxes

Do not reduce your deduction by any:

1. You took out any mortgages after Oc-

Enter the state and local personal property

•

tober 13, 1987, and used the proceeds for

State or local income tax refund or

taxes you paid, but only if the taxes were

purposes other than to buy, build, or im-

credit you expect to receive for 2006, or

based on value alone and were imposed on

prove your home, and all of these mort-

•

a yearly basis.

Refund of, or credit for, prior year

gages totaled over $100,000 at any time

state and local income taxes you actually

Example. You paid a yearly fee for the

during 2006. The limit is $50,000 if mar-

received in 2006. Instead, see the instruc-

registration of your car. Part of the fee was

ried filing separately. An example of this

tions for Form 1040, line 10.

based on the car’s value and part was based

type of mortgage is a home equity loan

A-3

Instructions For Schedules A & B (Form 1040) - 2006 Page 3

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