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Yes, as an Alabama resident, you can deduct real estate taxes paid out of state on your Alabama individual income tax return, provided you itemize your deductions on Alabama Schedule A. Alabama tax law typically follows federal rules, allowing you to deduct state and local property taxes paid on real estate you own for personal or investment use, regardless of which state the property is located in.
From the AL Form 40 instructions: "Real Estate Taxes (line 5). Include taxes you
paid on property you own in any state that was not used for business. If you pay real estate taxes as part of your mortgage payments, do not take a deduction for that amount. Deduct the taxes in the year the mortgage company actually paid them to the taxing authority."
Thank you for the explanation and pointing in the right direction. This was super helpful.
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