Can I Deduct Real Estate Taxes Paid?
Yes, you may be able to deduct real estate taxes paid, but there are specific rules and limitations based on your tax situation and the type of property involved.
Eligibility for Deduction
- You can deduct real estate taxes paid on property that you own and use as your primary or secondary residence.
- The deduction is available for taxes assessed by a local government (such as a county or city) for the right to use or occupy real property.
- Taxes must be based on the value of the property and not on a flat fee or special assessment for specific improvements (e.g., sidewalks, sewers).
Limitations and Phase-Outs
- The deduction for state and local taxes (SALT), including real estate taxes, is capped at $10,000 ($5,000 if married filing separately) for the 2025 tax year.
- This cap applies to the total of state and local property taxes, income taxes, and sales taxes combined.
- Only taxpayers who itemize deductions on Schedule A (Form 1040) can claim this deduction.
What Is Not Deductible?
- Special assessments for specific improvements (e.g., road repairs, sewer lines) are generally not deductible.
- Taxes paid on rental properties may be deductible as a business expense, not as an itemized deduction on Schedule A.
Reporting the Deduction
- Report real estate taxes on Schedule A (Form 1040), line 10.
- Keep records of tax bills, payment receipts, and any documentation showing the amount paid.
Source:
Publication 505
Publication 530
Publication 527
Disclaimer: Always verify details with the official Federal or State Department of Revenue Forms and Instructions before filing your return.