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Are property taxes deductible?
So you have decided to sell
your home and are currently negotiating seriously with some prospective
homebuyers. One of these individuals
that you are bargaining with seems to be very interested in purchasing your
home but they have some questions regarding the technical details of property
ownership. Even if you are selling your
home and moving to a new home that you do not own, it will help you in the home
selling process to have some understanding of the many issues that homeowners
will have to face. This is particularly
true if one of your prospective homebuyers will be a first time homebuyer.
Invariably, one of the first questions that you will have to answer will relate
to property taxes. On the subject of
property taxes, you will more than likely have to answer the question, “Are
property taxes deductible?” A simple
answer will be yes, however there are a variety of issues involved in the
deductibility of property taxes.
Property taxes are
government levies that are based on the assessed market value of an individual’s
property. This assessed value is based
on the analysis of your county assessor’s office. Property taxes on all forms of real estate are fully deductible
against current income taxes. This
usually includes all levies applied by state and local governments. This also includes foreign taxes, such as
those applied by school districts, on your property.
However, it is important to
note that imposed local benefit taxes for property improvement that are applied
by states and counties are not usually deductible. These taxes are used to assess streets, sidewalks, and sewer
lines. These local benefit taxes are
only deductible when they are used for: maintenance or repair, or interest
charges related to those benefits.
Additionally, taxes that are charged for you on issues related to
property ownership such as homeowner’s association fees; estate taxes; and
service charges for water, sewer, or trash collection cannot be deducted.
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