You can deduct the property taxes related to the royalty property on Schedule E with the income. Any property taxes not related to that income can get deducted as a personal itemized deduction on Schedule A. The Schedule A deduction is limited; the personal deduction of state and local income, general sales, and property taxes is limited to a combined total deduction of $10,000 ($5,000 if married filing separately). The property taxes go on either Schedule E or A - but not both.
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