The property tax deduction – which allows state and local property taxes to be deducted from the property owner’s federal income taxes – is one of many benefits of being a homeowner, but you don’t need to own a house to get this tax break — there are other ways to qualify.
Qualified deductions include real estate taxes paid to state, local, or foreign entities paid for the general public welfare. Note that this doesn’t include taxes paid on home renovations or services. Also, note that taxes paid on rental and commercial properties and on property not owned by the taxpayer cannot be deducted.
The owner of a property must pay taxes, assessed annually by a state and/or local government, on the value of the property. A property owner can claim a tax deduction on some or all of the property taxes paid if they use the property for personal use and itemize deductions on their federal tax return.
Real estate taxes that can be deducted include taxes paid at closing when buying or selling a home and taxes paid to a county or town’s tax assessor on the assessed value of the personal property. Note that in 2018, the deduction for state and local taxes, which includes property taxes, was capped at $10,000 ($5,000 if married filing separately).
Another property tax deduction consideration would be state and local personal property taxes, which are based on the value of personal property such as a boat or car. To qualify, the taxes must be charged to the property owner on an annual basis.
Considerations for property tax deductions:
-Primary home
-Co-op apartment (see IRS publication 530 for special rules)
-Vacation homes
-Land
-Property outside the United States
-Cars, RVs and other vehicles
-Boats
To learn more about the considerations and qualifications for property tax deductions, contact US Taxes, Inc. at inquiries@ustaxesinc.net or 1-609-588-8181 to learn more about these services.