If you're a homeowner, you may be eligible to claim a real estate taxes deduction on your federal income tax return. This article explains what qualifies as deductible real estate taxes, how to claim them, and what limitations may apply.
Are Property Taxes Deductible for Federal Income Tax?
Yes, property taxes are deductible for federal income tax purposes, but only if certain conditions are met. You can claim a deduction for real estate taxes if:
- The property is not used for business purposes.
- The taxes are based on the assessed value of the property.
- The assessment is applied uniformly across the community.
- The tax revenue is used for general community or governmental services.
How to Claim Deductions for Real Estate Taxes
You can claim deductions for real estate taxes as part of your itemized deductions on Schedule A of your federal tax return. If your mortgage payments include real estate taxes, only the amount actually paid to the taxing authority by your mortgage company during the tax year is deductible.
Where to Enter in Tax Software:
Go to:
- Federal > Deductions (select my forms) > Itemized Deductions > Mortgage Interest and Expenses
or - Federal > Deductions > Itemized Deductions > Taxes You Paid > Additional Real Estate Taxes for Non-Business Property
Note: For tax years 2020–2022, entering real estate taxes in this section will overwrite any previously entered amounts.
Standard Deduction vs. Itemized Deduction
Since 2018, the standard deduction has increased significantly. You should only itemize if your total itemized deductions, including deductible real estate taxes, exceed the standard deduction for your filing status.
State and Local Tax (SALT) Deduction Limit
Starting in 2018, the IRS limits the total deduction for state and local taxes (SALT), which includes:
- State income or sales tax
- Real estate tax
- Personal property tax
The maximum SALT deduction is:
- $10,000 for most filers
- $5,000 if Married Filing Separately
Refunds and Rebates
If you received a refund or rebate for real estate taxes during the tax year, you must reduce your deduction by that amount—but only if the refund was for taxes paid in the same year.
Example:
Tom received a rebate in August 2023 for real estate taxes he paid in 2022. Since the payment was made in a prior year, he does not need to reduce his 2023 deduction. However, if the rebate was for taxes paid in 2023, he would need to reduce his 2023 deduction accordingly.
Non-Deductible Charges
Do not include the following in your real estate taxes deduction:
- Homeowner’s association (HOA) dues
- trash collection fees
- Water, gas, or electric bills
- Homeowner’s insurance premiums
- Property maintenance fees
These are considered service charges and are not deductible.