Taxes on new cars and real estate taxes

[Pacun]

If you puchased a new car after February 16, 2009, and paid state or local taxes, your standard deduction becomes higher. The car price before taxes has to be less than $49,500. If you have a house that has been paid off and you paid more than $1000 in real estate taxes, your MFJ standard deduction becomes higher. So your MFJ standard deduction becomes ("standard deduction" plus "taxes paid for the car" plus 1,000) Let's say that you paid $3000 on real estate taxes and 5,000 on sales tax on your new car purchased in March 2009, your MFJ standard deduction would be $17,400. I included this new standard deduction on the warm up exercise.

It seems that you can deduct all the taxes paid on the car. So if a car cost $49,000 and a state charges 100% of the cost in taxes (no such state), your MFJ standard deduction would be $60,400.

After all that information, my question is: Is the sales taxes on new cars still in effect for 2010? Also, let's say that I have good credit and in December 2009, I put my beautiful signature on the paper and I drive away with a car without paying a penny. I still qualify for the new standard deduction even though I didn't pay anything in 2009, correct?

[Don in Upstate NY]

... Is the sales taxes on new cars still in effect for 2010? ...

Good for cars purchased after Feb. 16, 2009, and before Jan. 1, 2010 only. There has been talk about extending it into 2010, but AFAIK it's still just talk.

http://www.irs.gov/newsroom/article/0,,id=210901,00.html

[Don in Upstate NY]

... If you have a house that has been paid off and you paid more than $1000 in real estate taxes, your MFJ standard deduction becomes higher. ...

We know he means that even if your house isn't paid off, or your taxes are less than $1,000, or you don't file MFJ, your standard deduction still becomes higher. The $1,000 is the maximum for MFJ.

[Pacun]

I mentioned the house being paid off because if the house is not paid off, most likely they will itemized. If the house is paid off and that's the only itemizable deduction they have, we could forget. I have a couple who own a house which is paid off. I always tell them, not to bother about bringing the amount of taxes they paid for the house. This year, it is different.

[Gail in Virginia]

It was different last year as far as real estate taxes go, Pacun. This year just adds sales tax on new vehicle sales into the mix.

[Lion EA]

I think the car can cost more than $49,500; but you can only deduct sales tax on the first $49,500 for each car purchased during the relevant time frame. Also, you can deduct up to what the usual state sales tax would be. So, if the state taxes car sales @ 8% but the usual sales tax for most items in that state is 6%, then you can deduct only the 6% up to the limit. I don't have anyone who bought a new car over that price, so I really haven't had to get into the fine print.