Property Tax Deduction: Rules, How It Works
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The property tax deduction is one of many benefits of being a homeowner, but you don’t need to own a house to get this tax break — there are other ways to qualify.
Are property taxes deductible?
Yes. Generally, you may be able to deduct property taxes for your primary home, a co-op apartment, a vacation home, land, boats, cars, RVs and other vehicles. You may even be able to deduct property taxes for property outside of the United States.
See IRS publication 530 for special rules and exceptions.
» Need to back up? How property tax is calculated
What is the property tax deduction limit in 2024-2025?
The state and local income tax (SALT) deduction allows you to deduct up to $10,000 ($5,000 if married filing separately) for a combination of property taxes and either state and local income taxes or sales taxes. Renters might qualify for a property tax deduction or a property tax credit on their state taxes.
What doesn't count as a property tax deduction?
The IRS doesn’t allow property tax deductions for the following:
Property taxes on property you don’t own.
Property taxes you haven’t paid yet.
Assessments for building streets, sidewalks, or water and sewer systems in your neighborhood. (Assessments or taxes for maintenance or repair of those things are deductible, though.)
The portion of your tax bill that’s actually for services — water or trash, for example.
Transfer taxes on the sale of a house. Homeowners association assessments.
More than $10,000 ($5,000 if married filing separately) for a combination of property taxes and either state and local income taxes or sales taxes.
How to claim the property tax deduction
Find your tax records
Your local taxing authority can give you a copy of the tax bill for your home. Your paid property tax amount may also be included in a mortgage statement (Form 1098) from the beginning of the year. But you should also scrutinize the registration paperwork on your car, RV, boat or other movable assets. You might be paying property taxes on those, too, and the portion based on the value of the vehicle is probably deductible.
Exclude the stuff that doesn’t count
You can deduct a property tax only if it’s assessed uniformly at a similar rate for similar property in the community. The proceeds have to help the community, not pay for a special privilege or service for you. Sometimes counties make assessments for improvements. Those may not be deductible if they are not a tax.
Use Schedule A when you file your return
If you plan to claim a property tax deduction, you'll need to file Schedule A with your annual tax return. Note: This means you’ll need to itemize your taxes instead of taking the standard deduction. It’ll probably take more time to do your taxes if you itemize, but you could end up with a lower tax bill. Still, you'll want to look at where you stand with the standard deduction to see if it's worth it for you. For the 2024 tax year, the standard deduction ranges from $14,600 to $29,200 depending on your filing status.
Deduct your property taxes in the year you pay them
This may sound simple, but it can be tricky. There are two ways people typically pay property taxes on a house: They write a check once or twice a year when the bill comes, or they set aside money each month in an escrow account when they pay the mortgage. Don’t let the second method fool you — you can deduct only the taxes actually paid during the year.
How to write off property taxes if you bought or sold a house this year
If you owned taxable property for part of the year before selling it, you can usually deduct the taxes attributable to the time you owned the property. So, if you sold your house in July, you would deduct the first half of the year’s property taxes on the house, and the buyer would deduct the second half.
» Sold a house last year? Learn more about capital gains tax on home sales
How to get a bigger property tax deduction
Prepay your property taxes
If your semiannual tax bill is due next year but you pay it early — say, in December — you might be able to deduct it that year instead of the following year.
Save your registration statements
When it’s time to renew your registration on a vehicle, check if any part of the fee is actually property tax. There could be a tax deduction hiding in there.
Scrutinize your closing paperwork
If you bought or sold a house, go back and look at what you paid at closing for property taxes. It’s easy to overlook. Plus, after the tax assessor has a chance to revalue the property, you might get a second tax bill.
