BuyersFredericksburgHome OwnershipMortgageReal Estate September 5, 2023

Are Real Estate Taxes Deductible? A Dive Into Property Tax Deductions!

If you’re like many homeowners or prospective buyers, you’ve probably found yourself asking, “Are real estate taxes deductible?” It’s a hot question, especially come tax season, and today, we’ll shed some light on it!

Disclaimer: Remember, I am not an accountant, so always consult your trusted CPA or accountant before making any decisions based on the following info!

What are Real Estate Taxes?
Real estate taxes, often referred to as property taxes, are levies you pay to your local government based on the assessed value of your property. This includes land and any structures on it. But can you get some of that cash back come tax time?

Deducting Property Taxes: The Basics
The answer, generally, is yes—real estate taxes can be deductible. According to the IRS (and you can check their official website for a deep dive), taxpayers who itemize their federal income tax returns can deduct real estate taxes paid on their primary residences and any other homes they own.

However, there are some caveats:

  1. State and Local Taxes Limitation: There’s a cap on the amount of state and local taxes (SALT) you can deduct, which includes real estate taxes. This cap is $10,000 ($5,000 if married filing separately).
  2. Personal vs. Business: If you use your property solely for personal purposes, your property tax deduction is limited to the aforementioned SALT deduction. However, if you use your property for business or as a rental, things get a tad more complex—and potentially more beneficial. In those cases, property taxes could be deducted as a business expense.

Keep Those Records! 📂
Remember to keep detailed records if you plan to claim the real estate tax deduction. This means holding onto any tax bills or official documents from your local government. Trust me, if the IRS has questions, you’ll want to have answers!

In Conclusion…
So, to sum it up, are real estate taxes deductible? Absolutely. But as with anything tax-related, there are nuances and limitations. While I’ve provided a basic overview, you should definitely hit up your accountant for the nitty-gritty tailored to your unique situation.

Here are some additional resources that you may find helpful:

And if you’re browsing properties in Fredericksburg, VA, and curious about potential tax implications, give me a shout! Until then, happy house hunting and tax planning!