For the 2025 tax year, real estate taxes paid on property you own for personal use may be deducted on Line 5b of Schedule A (Form 1040). To be deductible, the taxes must be imposed on you by a state or local government, assessed uniformly at a like rate on all real property in the community, and used for general governmental purposes. You may deduct only the amount of tax that was both imposed on you and actually paid during 2025.
Deductible Real Estate Taxes
- Only state and local real estate taxes imposed on you and paid in 2025 are deductible.
- The deduction is allowed in the year paid, regardless of when the tax was assessed.
- If you pay real estate taxes through an escrow account, you may deduct only the amount your lender actually paid to the taxing authority in 2025, not the amount placed into escrow.
- Real estate taxes are combined with other state and local taxes and are subject to the overall SALT limitation on Line 5e of Schedule A.
What Is Not Deductible
- Foreign real estate taxes.
- Itemized charges for services, such as trash collection, water, sewer, or similar fees, even if billed with property taxes.
- Assessments for local benefits that increase the value of your property (for example, construction of streets, sidewalks, or sewer systems). These amounts are not deductible but are added to the property’s basis.
- Charges for maintenance or repair of existing public facilities may be deductible if they otherwise meet the requirements of a real estate tax.
Refunds and Rebates
- If you receive a refund or rebate in 2025 for real estate taxes paid in 2025, reduce your deduction by that amount.
- If you receive a refund in 2025 for taxes paid in a prior year, do not reduce your 2025 deduction. Instead, include the refund as income on Schedule 1 (Form 1040), Part I, to the extent the prior deduction reduced your tax (tax benefit rule; see Publication 525).
Sale of Home
- If you buy or sell a home during the year, real estate taxes must be allocated between the buyer and seller based on the number of days each owned the property.
- You may deduct only your share of the real estate taxes, even if one party paid the full amount at closing. The allocation is typically shown on the settlement statement.
Source:
Schedule A Instructions (Form 1040)
Disclaimer: Always verify details with the current IRS Form and Instructions, as well as your state’s Department of Revenue. For complex situations, consult a CPA or tax attorney.