question: in 2011,montgomery county experience a budget surplus. the county is considering using a portion of the surplus to rebate part of the real estate taxes paid by county real estate owners. what would be the income tax consequences to the real estate owners of receiving the rebate in 2012? need answer
State/Country relating to question: Maryland
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A refund of real estate (property) tax is treated the same way as a refund of state income taxes. If you deducted the real estate taxes as an itemized deduction in a prior year, and if the deduction provided a tax benefit, then the refund of the real estate taxes is taxable to the extent it provided a tax benefit in the prior year. If it is taxable, it is reported on line 21 (Other Income) of form 1040.
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