How to Claim Property Taxes on Federal Returns

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The Internal Revenue Service offers all taxpayers the choice of claiming the standard deduction or the sum of all itemized deductions. One itemized deduction is the amount you paid in property taxes. Many cities and states impose real estate taxes on land. If you itemize your deductions, you can use your real estate taxes to reduce your tax liability. However, unless the sum of your itemized deductions exceeds your standard deduction, you should forgo the property tax deduction.

Things You'll Need

  • Schedule A
  • Form 1040
  • Divide the number of days you owned the property by 365 to find the portion of the real estate taxes levied on the property you can deduct if you did not own the property for the entire year. If you did own the property for the entire year, the entire amount is deductible, so skip to Step 3. For example, if you owned the property for 140 days, divide 140 by 365 to get 0.3835616438356164.

  • Multiply the Step 1 result by the real estate taxes on the property for the entire year to find your deduction for real estate taxes. For this example, if the total real estate taxes for the year equals $4,000, multiply $4,000 by 0.3835616438356164 to find you can deduct $1,534.25.

  • Report the amount of deductible real estate taxes on line 6 of Schedule A. This amount, plus your other itemized deductions, will be subtracted from your taxable income.

  • File your taxes with Form 1040 and report the total of your itemized deductions, including the property tax deduction, on line 40. This amount decreases your taxable income.

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