Property Tax Deduction

The taxpayers that itemize their deductions can write off the property taxes paid to state and local governments. The property taxes fall under the state and local taxes, better known as SALT. So, you’ll claim your deduction for the property taxes paid along with state and local income taxes, if any.  

Since the property tax rates vary by state, how much you can claim will depend a lot on the amount. If you have a high taxable income and your state and local government taxes this income, there is a chance that you may not even get to get a deduction for property taxes. In another way of thinking, you may not also get the claim a deduction for the entire state and local income taxes you’ve paid.

Limitations on property tax deduction

There isn’t any requirement or rule for claiming the property tax deduction on your federal income tax return. However, there are general rules that apply to all state and income tax deductions. 

Before the Tax Cuts and Jobs Act of 2017, taxpayers could write off the total paid in state and local taxes. This was modified with the introduction of the new tax changes. Since the 2018 tax season, taxpayers are no longer eligible to claim the full deduction. The total limit on state and local taxes deduction is $10,000.

Beyond the $10,000 line, there isn’t anything there that concerns you. If the total state and local taxes you’ve paid for the tax season are more than $10,000, you’re better of just writing the maximum allowed deduction and done with it altogether.

Is there a difference between state and local property taxes?

There is undoubtedly a difference between state and local property taxes, but there isn’t any difference as far as the federal income taxes are concerned. The IRS won’t see a difference, and you’ll need to calculate the deduction amounts in both ways.