TurboTax Premier 2025 desktop - Property Tax for rentals counting towards itemized deduction

[FIRE4me]

Per the subject, 2025 desktop is taking the 1098 information from my rentals, specifically the Property Tax, and including those numbers towards my Schedule A Itemized Deduction under the Taxes You Paid section.

One of the clickable help links clearly states, "You can deduct property (real estate) taxes paid on your main home, a second home, a third home, timeshares, or any other real property that wasn't used for business or rental."

Those same Property Tax numbers are ALSO showing up in my Schedule E as a Tax expense as they should. 

The Mortgage Interest from these same 1098's is ONLY showing in my Schedule E as it should.

I don't see anywhere in the Desktop software to report a bug.

[MelindaS1]

Remove the property taxes from the Deductions & Credits section, and move the entry for this to: Wages & Income > Rental Properties and Royalties (Sch E) as a rental expense.

[FIRE4me]

Yes, you can manually delete just the Property Tax for each rental property's 1098 in the Deductions & Credits section. But you should not have to use this work-around. Shouldn't you just tick the Other box and TurboTax should apply the relevant deductions to each of the Rentals listed on your Schedule E?

[DianeW777]

It depends. The software notes are explaining that property taxes are not limited to your home when you itemized your deductions, unlike mortgage interest. This doesn't mean you can use the property taxes in both places. 

However, it gets a bit complicated for the software to know what to put in each property when rental homes are involved.

It's important to enter your property taxes for each rental in the activity for that rental, then only enter your home property tax in itemized deductions.

@FIRE4me 

[FIRE4me]

Thank you for the response and I accept your answer. I can entirely delete the 1098 for the rental properties. I do not see any guidance in the software that indicates rentals should not be entered in to this section.

Let me flip my original question around... In what scenario would you want to input a 1098 for a rental property into this section? It clearly has an "Other: This includes rentals you don’t live in and business properties."

[RobertB4444]

This particular entry is really for when you are renting out a part of your primary residence so that the remainder of the deductible interest and taxes flows onto your schedule A.  

I'm not sure why it would take the taxes that you have paid on rentals that are not listed as your personal residence and put them on your schedule A but it may be a good idea to walk through this and make sure that you haven't set up these rentals as part personal and part rental somewhere along the line.

[FIRE4me]

The part I struggle with is I don't see any guidance in the software that states this 3rd category is for renting out part of your primary residence. I only see, "This includes rentals you don’t live in and business properties."

To test my theory I added a random 1098, ticked the box for Other (3rd category) and TurboTax desktop went and added the property tax to my Schedule A on line 5b State and local real estate taxes (see instructions). This property is not mentioned anywhere else in my return. I call that a bug, but I don't see anywhere IN the software to report such a bug. "SMART" check did not flag any issues.

At this point, my recommendation is to not use this 3rd category until TurboTax provides better guidance on what it is supposed to used for. Disappointing they don't have a better mechanism to address perceived issues.