Deducting Your Real Estate (Property) Taxes
You can get a federal tax deduction for the state and local taxes you pay on real estate that you own, such as your main home, a vacation home or bare land.
Commonly (although incorrectly) called "property tax," this real estate tax is paid directly to the tax assessor or through an escrow account set up by your mortgage company.
To qualify for the deduction, you must own the property and you can claim only the amounts you paid in the given tax year.
Note: For instructions on entering real estate taxes on rental property, click here instead.
Where do I confirm how much I paid?
If you paid your real estate tax payments to an escrow account as part of your regular mortgage payments:
- Look on your year-end Mortgage Interest Statement or Form 1098. It could be reported in a box on the form itself (separate from the interest amount) or on other paperwork you receive with your Form 1098.
- You could receive a breakdown, showing how much you paid into the escrow account and how much was paid toward your real estate tax. Keep in mind, you can deduct ONLY the amount paid toward your real estate tax bill.
- If you can’t locate it, just call your lender and ask.
If you paid the taxes directly:
- Look through your financial records, or
- Go online to your county’s tax assessor website, or
- Call your tax assessor’s office.
Can I claim taxes I paid in a prior year?
You're allowed to deduct real estate taxes in the year you paid them, regardless of the year the taxes apply to.
For example, if you didn't pay your 2011 real estate taxes until 2012, you'd deduct them on your 2012 return (minus any late fees and interest).
Similarly, if you pre-paid your 2013 real estate taxes in 2012, you get to deduct them on your 2012 return – not your 2013 return.
What about states with no income tax?
You can still take a federal tax deduction on the real estate taxes you paid.
What real estate taxes can I deduct in the year I buy or sell my house?
When you use TurboTax, you will be walked through this question as you prepare your return, but here is a summary of how this works.
When You Buy Your House
In most states, you don't actually pay your taxes for a particular year until early the following year. Since you cannot deduct the real estate taxes until they are paid, you will not take any real estate tax deduction in the year you purchased the property.
In the year following the purchase, you can take a deduction for the total real estate tax you pay in that year, less any credit the seller gave you for real estate taxes at the closing in the previous year.
When You Sell Your House
In the year of the closing, you can deduct the sum of--
- real estate taxes you actually paid during the year of closing (in most states this will be the real estate taxes due for the previous year), AND
- any real estate taxes paid at closing (the credit you, as seller, are now giving the buyer--see above).
Again, please note that this deduction can be complicated, but TurboTax will carefully walk you through all of the questions necessary to make sure you take the correct deduction for real estate taxes.
Where do I enter real estate taxes in TurboTax?
To enter real estate taxes you paid for your main home, a vacation home, or land:
- Select the Federal Taxes tab (the Personal tab in the Home & Business edition).
- Select the Deductions & Credits subtab, select Explore on My Own.
- Scroll down the Deductions & Credits screen until you see the Your Home group.
- Click on the Start/Update button to the right of the Property Taxes category.
- Follow the prompts.