When Property Taxes Are Deductible

No, property taxes are not always deductible. Several conditions and limitations apply.

Ownership and Assessment Requirement:

Real estate taxes are deductible as itemized deductions only if the taxpayer owns the real estate and the taxes are based on the assessed value of the property [1].

Foreign Property Taxes:

Foreign real estate taxes are not deductible [1].

Special Assessments:

Not all charges on a property tax bill qualify. Charges for trash collection, sewer services, and improvement assessments (which tend to increase property value) are not deductible. Maintenance assessments for existing public facilities may be deducted as real estate taxes [2].

Prepayment Limitation:

Only taxes paid in the current year and assessed prior to the following year can be deducted in that tax year [1].

SALT Deduction Cap:

Even when property taxes are otherwise deductible, the total state and local tax (SALT) deduction — which includes real estate taxes, income taxes, and sales taxes combined — is capped. For 2025, the limit is $40,000 ($20,000 for MFS), and this amount is reduced for taxpayers with modified AGI exceeding $500,000, though it cannot drop below $10,000 [3].

Additionally, the taxpayer must itemize deductions rather than take the standard deduction for property taxes to provide any tax benefit.