Can I Claim Property Tax on My Federal Return?

Deductible Expense

• Property taxes are 100 percent deductible on your income tax return for each year you pay taxes on your home. The Internal Revenue Service stipulates that you must itemize your deductions to take the property tax deduction. The property tax deduction does not only apply to your primary residence; you may claim other homes, such as vacation or mobile homes, rental properties, or even boats. Furthermore, the IRS places no limits on the dollar amount of property taxes you can deduct, nor the number of homes you may claim.
  
  

Definition

• The IRS defines deductible real estate taxes as any local, state or foreign taxes assessed on real property. To qualify, taxes must be charged equally to all the property in the taxing authority. Local taxes imposed for sewer lines, street repair or sidewalk improvements are not deductible on your income tax return. If your lender impounds money each month to pay your property taxes, and you pay a sum that varies from the actual property tax amount due, deduct only the amount paid out of the escrow fund during the tax year to the assessor.
  
  

Where to File

• Enter your property tax deduction on Line 6, Schedule A, Form 1040, Itemized Deductions. Attach the form to Form 1040.
  
  

Considerations

• If you bought or sold a home at any time during the year, the property taxes must be split between the buyer and the seller, according to the number of days each owned the property.
  
  The seller is considered to have paid the taxes up to the day before the home sale, and the seller is treated as paying the taxes from the date of the sale.