By Jason Watson (Google+)
Generally you cannot deduct taxes charged for local benefits and improvements that tend to increase the value of your property. These include assessments for streets, sidewalks, water mains, sewer lines and public parking facilities. For example, the city refurbishes a downtown area but adds an assessment to all local business property tax bills- while taxes are generally a deductible expense, in this case they are not since you property was improved. This would be like you going out and refurbishing the sidewalks yourself- the IRS considers this an improvement which increases the basis (the cost) of the property.
You can deduct taxes for these local benefit only if the taxes are for maintenance, repairs or interest charges related to those benefits