Property Taxes
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Property Taxes
Property taxes, or "real estate taxes," are a welcome tax deduction for home owners. They are deductible on your income tax return—up to a total of $10,000 that combines them with state and local taxes—provided that you itemize your deductions.
Things To Know
- Property taxes are fully deductible.
- Assessments are not deductible.
Many homeowners who have a mortgage pay their property taxes as part of their monthly mortgage payments; their lender puts the property tax portion into an escrow account and then pays it when it is due. Just prior to tax time, you will receive a form in the mail that shows the amount of property tax you paid. You cannot deduct the taxes until they have actually been paid.
Assessments are different
If your city or municipality charges you an assessment for a benefit (new street, sidewalk, etc.) that increases the value of your property, that amount is not deductible. However, if the assessment is for maintenance, repair, or interest charges related to that benefit, you can take a deduction.
If an assessment is made by a homeowner association, it is not deductible because it was not imposed by a state or local government.
IRS Publication 530 provides more information about property taxes and their nuances.