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All real estate taxes (aka property taxes) are fully deductible on the appropriate schedule (A, C, F, or E). There is not a limitation as there is with mortgage interest. All property taxes can be deducted as long as they fit the below criteria as outlined in Topic No. 503 Deductible Taxes:

To be deductible, the tax must be imposed on you, and you must have paid it during your tax year. Nonbusiness taxes may only be claimed as an itemized deduction on Schedule A (Form 1040 or 1040-SR), Itemized Deductions.

Note. This would include vacant or bare land.

Many states and counties also impose local benefit taxes for improvements to property, such as assessments for streets, sidewalks, and sewer lines. These taxes cannot be deducted. However, you can increase the cost basis of your property by the amount of the assessment. Refer to IRS Publication 551 Basis of Assets for more information. Local benefits taxes are deductible if they are for maintenance or repair, or interest charges related to those benefits.

If a portion of your monthly mortgage payment goes into an escrow account, and periodically the lender pays your real estate taxes out of the account to the local government, do not deduct the amount paid into the escrow account. Only deduct the amount actually paid out of the escrow account during the year to the taxing authority.

To enter your deductible real estate taxes into the TaxAct® program:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Itemized or Standard Deductions in the Federal Quick Q&A Topics menu to expand, then click Taxes paid.
  3. Continue with the interview process to enter all of the appropriate information.
  4. On the screen titled Enter any other deductible taxes paid in 2020, enter "real estate taxes" for the Type of tax, enter the qualified Amount paid in real estate taxes during the tax year, then click Continue.

Additional Information

You cannot include:

  • Foreign taxes you paid on real estate.
  • Itemized charges for services to specific property or persons (for example, a $20 monthly charge per house for trash collection, a $5 charge for every 1,000 gallons of water consumed, or a flat charge for mowing a lawn that had grown higher than permitted under a local ordinance).
  • Charges for improvements that tend to increase the value of your property (for example, an assessment to build a new sidewalk). The cost of a property improvement is added to the basis of the property. However, a charge is deductible if it is used only to maintain an existing public facility in service (for example, a charge to repair an existing sidewalk, and any interest included in that charge).

If your mortgage payments include your real estate taxes, you can include only the amount the mortgage company actually paid to the taxing authority in 2019.

If you sold your home in 2019, any real estate tax charged to the buyer should be shown on your settlement statement and in Box 6 of any Form 1099-S Proceeds From Real Estate Transactions you received. This amount is considered a refund of real estate taxes. See Refunds and rebates, later. Any real estate taxes you paid at closing should be shown on your settlement statement.

For more information, see IRS Instructions for Schedule A Itemized Deductions, Line 5.

Your deduction may be limited. See Reduction of Itemized Deductions for more information.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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