If you paid state or local taxes on personal property such as a boat, motor home, recreational vehicle (RV), or trailer, you may be able to deduct those taxes as an itemized deduction on Schedule A.
However, not every tax or fee related to personal property qualifies. The IRS allows a deduction only for certain value-based personal property taxes.
To qualify, the tax must meet both of these requirements:
- It is imposed on a yearly basis.
- It is based solely on the value of the property.
Examples of Deductible Personal Property Taxes
The following may qualify as deductible personal property taxes if they are assessed annually and based on the property's value:
- Annual ad valorem tax on a boat
- Value-based tax on a motor home or RV
- State or local personal property tax on a trailer
- Annual tax assessed on other personal property based solely on value
Examples That Are Not Deductible
The following generally do not qualify as deductible personal property taxes:
- Flat registration fees
- Fees based on a vehicle's weight
- Fees based on age, horsepower, or usage
- One-time taxes or assessments
- License plate fees or other registration charges not based on value
If a registration bill includes both deductible and non-deductible charges, only the portion that represents an annual value-based personal property tax may be deductible.
SALT Limitation
Personal property taxes are included with other state and local taxes you claim on Schedule A. These deductions may be subject to the overall limitation on state and local tax deductions (commonly called the SALT limit).
Additional Information
For more information, see the IRS instructions for Schedule A (Form 1040).