Are Property Taxes Deductible? Here’s Who Qualifies

SDI Productions / Getty Images

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

If you’re a homeowner wondering whether you can deduct your property taxes on your federal tax return, the short answer is yes, property taxes are deductible. 

However, they’re only deductible if you itemize your deductions instead of taking the standard deduction. They’re also subject to a $10,000 combined limit on state and local taxes.

For many homeowners, especially after tax law changes in 2018, the standard deduction has become more valuable than itemizing, which means property taxes may not actually save you money on your taxes anymore. 

Understanding when property tax deductions make sense requires knowing the rules around itemizing, the SALT deduction cap, and how different types of properties are treated.

At a Glance

Item	Details
Deduction	Property tax deduction (as part of the SALT deduction)
Who Qualifies	Taxpayers who itemize on Schedule A
Who Doesn’t	Taxpayers who take the standard deduction
Where It’s Claimed	Schedule A (Itemized Deductions)
Key Limit	SALT cap limits the combined deduction for property taxes + state income taxes (or sales taxes)
Common “Gotcha”	HOA fees and many special assessments don’t count as deductible property taxes

Are Property Taxes Tax Deductible?

Yes, property taxes are deductible on your federal income tax return, but there are two important requirements you need to meet.

First, you must itemize your deductions on Schedule A rather than taking the standard deduction. 

The standard deduction for tax year 2026 is $16,100 for single filers and $32,200 for married couples filing jointly. If your total itemized deductions (including property taxes, mortgage interest, charitable contributions, and other qualifying expenses) don’t exceed these amounts, you’re better off taking the standard deduction. If this is the case, your property taxes won’t actually reduce your tax bill.

Second, your property tax deduction is subject to the state and local tax (SALT) deduction cap of $10,000. 

For homeowners with modest property tax bills and typical deductions, the math often doesn’t work out. If you’re single with $4,000 in property taxes and $3,000 in charitable donations, your $7,000 in itemized deductions falls well short of the $15,000 standard deduction. You’d take the standard deduction and your property taxes wouldn’t provide any tax benefit.

However, if you’re married with $9,000 in property taxes, $20,000 in mortgage interest, and $5,000 in charitable contributions, your $34,000 in itemized deductions exceeds the $30,000 standard deduction by $4,000, providing real tax savings.

How the SALT Deduction Works 

The state and local tax (SALT) deduction is a crucial piece of understanding property tax deductions, especially since it limits how much you can actually deduct.

What Counts Toward the SALT Limit 

The SALT deduction allows you to deduct certain state and local taxes on your federal return, but they’re combined and capped at $10,000 total. Three types of taxes count toward your SALT deduction limit:

• Property taxes paid on real estate you own, including your primary home and vacation properties.
• State income taxes are withheld from your paycheck or paid as estimated payments throughout the year.
• State sales taxes as an alternative to deducting state income taxes (you can choose one or the other, but not both).

You add these up and deduct whichever combination gives you the most benefit, up to the $10,000 cap. Most people choose to deduct state income taxes and property taxes, as these typically exceed sales tax amounts.

The $10,000 SALT Cap Explained 

Understanding the SALT cap is critical because it’s where many homeowners discover their property taxes don’t provide the tax benefit they expected.

Here’s where the SALT deduction gets restrictive: The Tax Cuts and Jobs Act of 2017 introduced a $10,000 cap on the total amount of state and local taxes you can deduct. This limit is the same whether you’re single or married filing jointly.

This cap particularly affects homeowners in high-tax states like California, New York, New Jersey, and Connecticut. If you pay $8,000 in property taxes and $6,000 in state income taxes, that’s $14,000 in total SALT expenses… but you can only deduct $10,000 of it.

The fact that married couples face the same $10,000 limit as single filers creates what’s sometimes called a “marriage penalty” in the tax code. A married couple with a combined $20,000 in property and state income taxes can only deduct $10,000, while two single filers living separately could each deduct $10,000 (for a combined $20,000 deduction).

Itemized Deduction vs Standard Deduction 

Before you can deduct property taxes, you need to decide whether itemizing or taking the standard deduction makes more financial sense.

When Itemizing Makes Sense 

You should itemize when your total itemized deductions exceed the standard deduction amount.

Itemizing makes sense when your total itemized deductions exceed the standard deduction amount. This typically happens for homeowners who have:

• High property taxes combined with a mortgage: If you’re paying $8,000 in property taxes and $15,000 in mortgage interest, you’re already at $23,000 in deductions before adding anything else. For a married couple, that’s worth itemizing since it exceeds the $30,000 standard deduction.
• Significant charitable contributions: Large charitable donations combined with property taxes and mortgage interest can push you over the standard deduction threshold.
• High state income taxes: If you live in a high-tax state and earn a substantial income, your state taxes alone might approach the $10,000 SALT cap, and adding other deductions could make itemizing worthwhile.

When the Standard Deduction Is Better 

The standard deduction has become the better choice for most homeowners, especially after 2018’s tax law changes.

For many homeowners, the standard deduction is the better choice. This includes:

• Homeowners with paid-off mortgages. Without mortgage interest, property taxes alone rarely exceed the standard deduction, especially with the SALT cap.
• Those in low-tax states. If you pay $2,500 in property taxes and have minimal state income taxes, you’re nowhere near the standard deduction threshold.
• Homeowners with few other deductible expenses. If property taxes are your only significant deduction, the standard deduction almost always wins.

Which Property Taxes Qualify 

Not all property types are treated equally when it comes to deducting property taxes. 

Primary Residence Property Taxes 

Property taxes on your main home are the most straightforward deduction.

Annual property taxes assessed by your local government on your primary home are deductible. These are the taxes based on your home’s assessed value that you pay to your county, city, or municipality.

If you pay property taxes through an escrow account as part of your mortgage payment, you can only deduct the amount your mortgage servicer actually paid to the tax authority during the tax year, and not the total amount you paid into escrow. 

Your mortgage servicer will send you a Form 1098 showing the property taxes paid on your behalf.

Second Homes and Vacation Properties 

If you own a vacation home or second property, the deduction rules are similar but the SALT cap becomes more restrictive.

Property taxes on a second home or vacation property are also deductible under the same rules as your primary residence. The property must be for personal use, and the taxes count toward your $10,000 SALT deduction limit.

If you own both a primary home and a vacation property, you add the property taxes from both properties together (along with your state income taxes) and can deduct up to $10,000 total.

For example, if you pay $6,000 on your primary home and $4,000 on your beach house, that’s $10,000 in property taxes alone before even considering state income taxes. This means you’d hit the SALT cap just from property taxes.

Rental Property Property Taxes 

Rental properties get special treatment that’s actually more favorable than personal residences.

Property taxes on rental properties follow completely different rules. These are deducted as a business expense on Schedule E rather than as part of your itemized deductions on Schedule A.

This is actually better for landlords because rental property taxes aren’t subject to the $10,000 SALT cap and don’t require you to itemize. You can take the standard deduction and still deduct rental property taxes as a business expense.

If you own a rental property with $5,000 in annual property taxes, you deduct the full $5,000 against your rental income regardless of the SALT cap or whether you itemize.

Property Taxes You Cannot Deduct 

Many homeowners mistakenly try to deduct property-related charges that don’t qualify as property taxes.

Several property-related charges don’t qualify as deductible property taxes:

• Homeowners association (HOA) fees are not deductible. Even though they’re mandatory payments related to your property, the IRS doesn’t consider them property taxes because they’re paid to a private organization, not a government entity.
• Special assessments for improvements typically aren’t deductible. If your local government charges you for sidewalk installation, sewer line improvements, or other capital improvements that increase your property value, these are considered additions to your cost basis, not deductible taxes. However, special assessments for maintenance or repairs (like street repairs) may be deductible.
• Utility charges bundled with your property tax bill aren’t deductible. If your tax bill includes charges for water, sewage, or trash pickup, you need to separate those out; only the actual property tax portion is deductible.
• Transfer taxes paid when buying a home aren’t deductible as property taxes. These are added to your home’s cost basis instead.

Examples of Property Tax Deductions 

Let’s look at two real-world scenarios to see when property tax deductions work and when they don’t.

Example for a Single Homeowner 

Here’s how property tax deductions work when itemizing makes sense.

Marla is single and pays $5,000 annually in property taxes on her home. She also pays $8,000 in mortgage interest and donates $1,500 to charity. Her state income tax is $4,000.

Her total itemized deductions would be:

• Property taxes: $5,000
• State income taxes: $4,000
• SALT deduction (limited): $9,000 (doesn’t hit the $10,000 cap)
• Mortgage interest: $8,000
• Charitable contributions: $1,500
• Total itemized deductions: $18,500

Since her itemized deductions of $18,500 exceed the $16,100 standard deduction for single filers, Rachel should itemize. Her property taxes save her money because itemizing makes sense.

Example for a Married Couple 

This example shows how the SALT cap and higher standard deduction can eliminate the benefit of deducting property taxes.

Marcus and Lisa are married and file jointly. They pay $9,000 in property taxes and $7,000 in state income taxes. They also pay $12,000 in mortgage interest and donate $2,000 to charity.

Their itemized deductions:

• Property taxes: $9,000
• State income taxes: $7,000
• SALT deduction (capped): $10,000 (only can deduct $10,000 despite paying $16,000)
• Mortgage interest: $12,000
• Charitable contributions: $2,000
• Total itemized deductions: $24,000

Since their itemized deductions of $24,000 are less than the $32,200 standard deduction for married couples, Tom and Lisa should take the standard deduction. Their property taxes provide no actual tax benefit.

This is the frustrating reality for many couples in high-tax states, since they pay substantial property and state taxes but still can’t benefit from deducting them.

Common Property Tax Deduction Mistakes To Avoid 

Even experienced taxpayers make errors when deducting property taxes. Here are the most common mistakes to watch out for.

• Confusing escrow payments with actual taxes paid. You can only deduct property taxes actually paid to the tax authority during the tax year. If you paid $6,000 into escrow but your servicer only forwarded $5,500 to the county, you can only deduct $5,500. Check your Form 1098 for the correct amount.
• Assuming HOA fees are deductible. This is one of the most common mistakes. HOA fees, no matter how expensive, are not property taxes and cannot be deducted on your personal tax return.
• Missing rental property rules. If you own rental property, don’t include those property taxes with your personal property taxes on Schedule A. They belong on Schedule E as rental expenses and aren’t subject to the SALT cap.
• Deducting special assessments incorrectly. Not all special assessments qualify. Charges for improvements generally aren’t deductible, while charges for maintenance may be. When in doubt, consult the assessment notice to determine whether it’s for improvements or services.
• Forgetting about the timing of payments. You can only deduct property taxes in the year you paid them, not when they were assessed. If you prepaid 2026 taxes in December 2025, you deduct them in 2025.

Determining If You Can Deduct Property Taxes From Your Return 

Property taxes are deductible, but whether they actually save you money depends on several factors: 

• Whether you itemize
• How the SALT cap affects you
• What other deductions you have

For many homeowners, especially after 2018’s tax law changes, the higher standard deduction means property taxes no longer provide a tax benefit.

If you’re in a high-tax state with a mortgage and other significant deductions, property taxes can still help reduce your tax bill. If you own rental property, you get an even better deal since rental property taxes aren’t subject to the SALT cap.

The key is understanding your complete tax picture. Before assuming you can deduct property taxes, calculate whether itemizing actually beats the standard deduction. For many homeowners, the answer is no, but for those who do itemize, understanding the SALT cap and property tax rules ensures you maximize your deductions without making costly mistakes.If you’re unsure, working with a qualified tax professional can help.

Final Take to GO

Property taxes are deductible if you itemize but whether they save you money depends on:

• Your total itemized deductions vs your standard deduction
• The SALT cap for your tax year
• Whether the property is personal-use or a rental

If you’re close to the line, run the numbers both ways (standard vs itemized) before assuming property taxes will lower your tax bill.

Data is accurate as of Feb. 4, 2026, and is subject to change.

Share This Article: