If apportionment is not provided for, the seller s gain or loss on the sale and the purchaser s basis in the property must be adjusted either upward or downward, depending on which party actually pays the taxes. Real Property Assessments for Local Benefits. If the assessment is for improvements such as sidewalks, lighting, and drainage, and is assessed against the property that benefits from the improvements, the assessment is not deductible. If the assessment is for maintenance, repair or interest charges, the assessment is deductible. General Sales Tax is treated as part of the purchase price of the property, increasing its basis and is, therefore, not deductible.
Interest is compensation for the use or forbearance of money.
A taxpayer cannot deduct interest payments made for someone else if he or she is not legally liable to make them. Charge for Services. It must be determined whether an item is interest or a charge for services rendered. Services charges, such as fees for appraisals or title searches are not deductible. Points charged when property is sold that represent additional interest expense are deductible under certain conditions.