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2009 Property Tax Deduction for Taxpayers Who Don't Itemize

Updated: 11/03/2009
Article ID: 6395

Tax break applies to years 2008 and 2009

Property owners who use the standard deduction, rather than itemize their individual deductions when filing their income taxes, will get a new tax break for tax years 2008 and 2009. 

A chance to deduct property taxes

Prior to 2008, only taxpayers who itemized their deductions – that is, listed certain expenses such as mortgage interest to reduce their overall tax liability – could deduct state and local property taxes. Those who took the standard deduction, or a fixed amount of income not subject to tax, could not.

Limits set on deduction amount

For 2008 and for 2009, non-itemizers will be allowed to take a limited property tax deduction, up to $500 for single taxpayers and up to $1,000 for married couples filing jointly.

For example, a married couple in the 25 percent tax bracket would save $250 in taxes, while a single filer in the 25 percent bracket would save $125. 

The deduction is determined by whichever of the following is lower:
  • The amount of property taxes paid,
  • Or $500 for single taxpayers or $1,000 for married, filing jointly.

TurboTax will automatically calculate this deduction for you. Just be sure to enter the amount of your property taxes when the program prompts you.

Break could be boon to long-time property owners

This tax break will most likely apply to homeowners who are close to paying off, or have paid off, their mortgages (and thereby don’t benefit from itemizing deductions).

It could also help lower-income homeowners who don’t itemize because their individual deductions would be less than the standard deduction.

 


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