Property tax deduction guide

What Are Deductible Property Taxes?

If you own real estate, the property taxes you pay to your local government are generally deductible on your federal tax return. This includes taxes on your primary home, vacation home, and land.

What Qualifies

You can deduct ad valorem property taxes—taxes based on the assessed value of your property. These are the standard annual property taxes most homeowners pay to their county or municipality.

You Can Deduct:

• Annual property taxes on your primary residence
• Property taxes on a second or vacation home
• Property taxes on land you own
• Property taxes paid at closing when you bought or sold a home (your share based on the closing date)

What Doesn't Qualify:

• **Special assessments** for local improvements (sidewalks, sewer lines, etc.)—these add value to your property and aren't deductible
• Homeowner association (HOA) fees
• Utility fees or service charges
• Transfer taxes at closing

The SALT Cap ($10,000)

This is the big one to know about. The State and Local Tax (SALT) deduction is capped at $10,000 per return ($5,000 if married filing separately). This cap includes:

• State income taxes (or state sales taxes)
• Property taxes

So if you pay $7,000 in property taxes and $5,000 in state income taxes, your total is $12,000—but you can only deduct $10,000. The remaining $2,000 is lost.

How to Enter in FileJoy

1. Click **Deductions** in the left sidebar
2. Select **Property taxes**
3. Enter the total property taxes paid during the year (check your county tax bill or your mortgage escrow statement)
4. Save

FileJoy automatically applies the SALT cap and combines your property taxes with state income taxes. You'll see a clear breakdown showing how much of your SALT deduction is being used.

Tips

• Your mortgage company may pay property taxes from an escrow account—check your **annual escrow statement** for the actual amount paid
• If you bought or sold a home during the year, only deduct the taxes for the period you owned the property
• You must **itemize** to claim property tax deductions—they're not available with the standard deduction
• Keep your property tax bills as documentation