Can I deduct property (real estate) taxes?
Yes, if you own the property, it’s for your personal use and you also itemize your deductions.
Deductible property (real estate) taxes include taxes paid at closing when buying or selling a home, as well as taxes paid to your county or town’s tax assessor (either directly or through a mortgage escrow account) on the assessed value of your property.
Important: This tax is part of a combination of several taxes where the aggregate deduction is capped at $10,000 ($5,000 if married filing separately) for the sum of these taxes:
- Property taxes (real estate taxes + personal property taxes)
- State and local income tax, OR Sales tax
Deduct property (real estate) taxes for your:
- Main home
- Vacation homes
You can't deduct it for:
- Property you don’t own
- Rental property or business property (claim it as an expense, not a deduction)
- Local improvements, like streets or sidewalks
- Trash collection, library taxes, or anything else not directly related to property value
- Foreign property (this is a change from 2017 due to tax reform; you won’t be able to deduct foreign property taxes on returns for 2018 – 2025).
Deducting Prior Year or Future Year Property Taxes
You can deduct prior year or future year property taxes during the year you make the actual payment – in certain situations. More info
Some more important info:
- If you pay your property tax with your mortgage, you can only deduct it after your lender has paid the tax on your behalf. You can contact your lender to find out when they typically make these payments. (For example a lender might make the payment in October to cover the total amount of the following year’s taxes; or they might make quarterly payments. It depends on the taxing authority in your location.)
- Co-op members: Only claim your share of the amount paid by the corporation
- Multiple owners: Split the deduction by what each person paid
- School taxes are deductible only if they are based on the assessed value of your property
As mentioned above, property (real estate) taxes are part of a combined deduction. You can deduct up to $10,000 ($5,000 if married filing separately) for the total of: Property taxes (real estate taxes + personal property taxes) and either your State and local income taxes, OR your Sales tax.
Prior to Tax Reform for 2018, the combined total of the taxes had no cap for taking the deduction. Taxpayers must itemize to get this deduction – that part hasn't changed.
This hypothetical example illustrates the differences:
Deductible amount = $5,000 (married filing separately) or $10,000 (all others)
Deductible amount = $6,500 (married filing separately) or $13,000 (all others)