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    Internal Revenue Service
 Revenue Ruling

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. 

Full Text

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.