The property taxes you pay can be deducted as such if you itemize your deductions.
You can also elect to capitalize the property taxes and other holding costs such as mortgage interest and insurance. To do so, attach a statement to your tax return each year identifying the property and the election under code section 1.266-1. That way the holding costs will be added to the cost and deductible when you sell the property.
You should keep track of the purchase cost and any improvements made as you can add them to the cost and deduct them when you sell the property.
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