Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 67-21

1967-1 C.B. 45

Sec. 164

IRS Headnote

The owner of an interest in real property constituting a reserved term of years may deduct, as taxes, the real property taxes he pays on the property subject to the term of years.

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Rev. Rul. 67-21

Advice has been requested whether the owner of an interest in real property constituting a reserved term of years may deduct, as taxes, the real property taxes which he pays.

The taxpayer has conveyed his house and lot to his church reserving a term of 5 years for his own exclusive possession and use, subject to an agreed condition that the taxpayer is to pay any real property taxes assessed on the property during such reserved term.

Section 164 of the Internal Revenue Code of 1954 provides the general rule that State, local, and foreign real property taxes shall be allowed as a deduction for the taxable year in which paid or accrued.

In the case of Estate of Mary Rumsey Movius , et al., 22 T.C. 391 (1954), acquiescence, C.B. 1954-2, 5, the Tax Court of the United States states that the rule appears to be clear that a person owning a beneficial interest in property who pays taxes thereon to protect that interest may deduct the payment so made, even though the legal title to the property is in another against whom the tax is assessed.

Accordingly, the owner of an interest in real property constituting a reserved term of years may deduct, as taxes, the real property taxes he pays on the property subject to the term of years.