The property tax deduction is one of the most popular deductions available to taxpayers. This deduction allows you to deduct a portion of your property taxes from your federal income taxes. The amount that you can deduct depends on the value of your property and the tax rate in your area. The deduction is available for both primary and secondary residences.
What is a property tax deduction?
A property tax deduction is a deduction that allows you to subtract a certain amount of your property taxes from your federal income taxes. The standard deduction for 2019 is $12,200 for single filers and $24,400 for married couples filing jointly. For those who itemize their deductions, the average property tax deduction was $2,199 in 2018.
The Property Tax Deduction is one of the most popular deductions available to taxpayers. In order to claim the deduction, you must itemize your deductions on Schedule A of your Form 1040. The standard deduction for 2019 is $12,200 for single filers and $24,400 for married couples filing jointly. For those who itemize their deductions, the average property tax deduction was $2,199 in 2018.
What sort of property is eligible for the deduction?
The property tax deduction can be taken on your primary residence as well as any secondary residences, such as a vacation home. The deduction is also available for investment properties, though there are some limits. For example, if you own a rental property, you can only deduct the portion of the property taxes that are attributable to the rental units. You cannot deduct any portion of the taxes that are attributable to the common areas, such as the lobby or swimming pool.
What sort of property isn’t eligible?
There are a few different types of properties that aren’t eligible for the property tax deduction. These include vacant land, certain types of leased property, and properties that are used for personal use.
Vacant land is ineligible because it doesn’t have any buildings or structures on it that can be taxed. Leased property is also ineligible because the owner of the property doesn’t actually pay the taxes – the tenant does. And finally, properties that are used for personal use (like your primary residence) can’t be deducted either.
How does the property tax deduction work?
Assuming you’re a homeowner, the Internal Revenue Service (IRS) allows you to deduct your property taxes on your federal income tax return. This is an itemized deduction, so you’ll need to itemize your deductions on Schedule A of Form 1040 in order to claim it.
For most people, it’s more beneficial to take the standard deduction instead. But if you have a lot of other deductible expenses – such as mortgage interest, state and local taxes, and charitable donations – itemizing might save you more money in the long run.
To deduct your property taxes, simply enter the amount you paid during the tax year on Line 6 of Schedule A. If you paid your taxes through an escrow account with your mortgage company, you can find the amount you paid on your annual statement from them.
How big a property tax deduction can you take?
You may be able to deduct all of your property taxes if you itemize on your federal income tax return. The deduction is claimed on Schedule A, Itemized Deductions, which must be attached to your Form 1040. You can deduct state and local real estate taxes, as well as personal property taxes, based on the value of your property.
The amount of your deduction is generally the same as the amount of tax you paid to the government during the year. However, there are a few limitations. For example, you can only deduct taxes that were assessed uniformly against all properties in the jurisdiction where they were levied. You also can’t deduct any portion of taxes that were used to pay for local improvements, such as a new sidewalk or streetlights.
How to claim the property tax deduction
If you own a home, you’re likely eligible for a deduction on your property taxes. The first step is to find out how much you paid in property taxes last year. This information should be available on your tax bill or escrow statement. If you don’t have this document, you can contact your local tax assessor’s office.
Once you know how much you paid, you’ll need to itemize your deductions on Schedule A of your Form 1040. This may not be beneficial if your standard deduction is higher than your total itemized deductions. However, if you do itemize, simply list your property taxes as an itemized deduction. You’ll need to include the amount of state and local taxes you paid, as well as any real estate taxes.
