Real Estate and Personal Property Taxes in header of articles
Real Estate and Personal Property Taxes
Real Estate Taxes
You can deduct the real estate taxes you pay on property. However, you must deduct them in the year you pay them.
Ex: You received a January 2013 bill and prepaid it in December 2012. So, you can deduct that amount on your 2012 return.
Your mortgage lender might pay your real estate taxes from an escrow account. If so, they’ll send you Form 1098. The form will report the real estate taxes you paid. You should receive your 1098 by Jan. 31, 2013. If you don't, contact your mortgage lender.
HUD statements also report real estate and property taxes. You receive this statement when you buy or sell property. The statement lists the taxes paid by both the buyer and seller.
You can’t deduct any special fees charged by condo associations as real estate taxes. These fees are considered condo fees. However, the condo association might send you a statement. If so, you can deduct property taxes you paid with association fees. The statement should tell you the amount of property tax the paid fees covered.
Personal Property Taxes
You can deduct the tax you pay on personal property. Personal property tax -- also called an excise tax -- is based on the value of the item. The excise tax is levied on property like cars and boats.
To deduct property taxes, all of these must apply:
The tax is imposed on personal property.
The tax must be ad valorem. This means it’s mostly in proportion to the value of the personal property.
The tax is imposed on an annual basis, even if collected more or less than once per year.
Claim these as itemized deductions on Schedule A:
Real estate taxes on line 6
Personal property taxes on line 7
Taxes you deduct elsewhere on your return don’t qualify for this deduction. Ex: Schedule E