The U.S. federal government allows renters to claim property-tax deductions if they have a lease that requires the tenant to pay property taxes instead of the landlord. That's not the case for many apartment dwellers. However, some renters may still be able to claim a tax credit if they meet certain income and residency requirements.
People often associate property-tax payments with homeownership. However, landlords also require renters to pay at least a portion of the property taxes for their apartment buildings or rental homes and condominiums. Property taxes are usually included in monthly rent payments and not listed as a separate cost as they are for many homeowners. Some U.S. states allow tenants to claim a renter's credit on their tax returns, which is intended to offset the property taxes that renters pay their landlords.
People who want to claim available rental tax credits in their state have to meet certain requirements. For example, the Maryland Renters' Tax Credit Program requires that a rental home be a taxpayer's primary residence to claim the credit that could be as high as $750. The tenant also is required to have lived at the rental property for at least six months of the year in which the credit is claimed. Renters don't qualify for the credit if they received federal or state housing subsidies during the year.
California's nonrefundable renter's credit is only intended to offset a tenant's tax liability. Single taxpayers are ineligible for the credit if their adjusted gross income exceeds $34,722, and married couples who file a joint tax return are ineligible if their adjusted gross income is higher than $69,444. In any case, the credit is low. The California Franchise Tax Board website indicates that single people who meet the eligibility guidelines could only expect a $60 credit in 2010. That amount is merely doubled for married couples.
Tax Credits Debated
An Associated Press article notes a debate in Missouri over reducing or eliminating tax credits to save the state money. According to the AP article titled "Missouri House Republicans Question Tax Credit Report," a state commission determined Missouri could eventually save up to $220 million if the state decided to overhaul tax-credit programs. Missouri's low-income and disabled senior citizens can claim a credit for their rent or property taxes. The AP reports that the commission suggested that only homeowners should be eligible for the credit, but some politicians disagreed with the commission's recommendations.