Property owners often wonder: Are property taxes deductible on your annual tax return? The short answer is yes—but only in specific circumstances and within certain limits. Knowing the rules can help you make the most of your deductions and reduce your overall tax bill, especially when supported by expert planning.
At Simplicity Financial, we help homeowners, rental property investors, and small business owners navigate complex tax codes with ease. With our outsourced tax preparation and remote bookkeeping services, we’ll help you stay organized and make smarter financial decisions—no matter where you’re located.
If you’re unsure what you can claim, how much, or whether your state rules differ, this article will break it all down, including special info for Californians, rental property owners, and real estate investors.
Need help now? Reach out to our team to get started with personalized support: Contact Simplicity Financial 💼
Are Property Taxes Tax Deductible?
Yes—property taxes can be deductible if you itemize your deductions on Schedule A of your federal return. But the IRS places limits and conditions on what qualifies.
Per the IRS Publication 530, deductible property taxes must be:
- Imposed by a state or local government
- Based on the assessed value of the property
- Charged uniformly across similar properties in the area
This means fees for garbage collection, water, or local assessments for sidewalks and sewers are not deductible—even if they show up on your property tax bill.
To avoid missing key write-offs or claiming ineligible ones, our fractional CFO services can help build a clear, compliant deduction strategy for your situation.
How Much of Your Property Taxes Are Tax Deductible?
A key question many ask is: how much of your property taxes are tax deductible under current law?
Under the Tax Cuts and Jobs Act, there’s now a $10,000 cap ($5,000 if married filing separately) on the combined amount of:
- State income taxes
- Local income taxes
- Sales taxes (in some cases)
- Property taxes
So, even if your property tax bill exceeds $10,000, you can only deduct up to that combined cap.
Our team can help you calculate whether to itemize or take the standard deduction and how property taxes factor in.
Are Property Taxes Tax Deductible in California?
Yes—but with a catch. Are property taxes tax deductible in California? Technically, yes—California residents can deduct property taxes on their federal tax returns, not their state returns. California does not allow a separate property tax deduction at the state level.
So if you’re wondering are property taxes deductible in California, keep in mind that you must itemize deductions on your federal return to benefit from this.
At Simplicity Financial, we’re proud to offer support for clients across the state. Our team understands local nuances (like Ontario Ranch properties with farmland) and can help Californians stay compliant and maximize deductions.
Need tax help from anywhere in the state? We provide remote service throughout California and across the U.S.
Are Real Estate Property Taxes Deductible for Investment Property?
If you’re a landlord, the rules are a little different. Are real estate property taxes deductible for rental properties? Yes—and even better, they’re not subject to the $10,000 SALT cap.
For rental property owners, property taxes are considered a business expense and deducted on Schedule E, not Schedule A.
Our outsourced bookkeeping team can track these deductions for you year-round, helping you stay organized and audit-ready.
What Closing Costs Are Tax Deductible for Rental Property?
When buying a rental property, it’s common to ask: what closing costs are tax deductible for rental property owners?
Some deductible closing costs include:
- Loan interest (prepaid mortgage interest)
- Real estate taxes paid at closing
- Certain legal fees related to the transaction
- Title insurance and mortgage insurance (in specific cases)
- Points paid on the mortgage (if applicable)
Other costs, like attorney fees not tied to the property, or transfer taxes, are not deductible but may be added to the property’s basis for depreciation.
Need help tracking these expenses? Let our team support your property portfolio with clean, digital bookkeeping.
Are Home Property Taxes Deductible If You Live in the Home?
Absolutely. If you live in your home and itemize your deductions, you can claim home property taxes—within the $10,000 limit.
That means are home property taxes deductible? Yes. But it’s important to:
- Exclude ineligible taxes like local assessments for improvements
- Not confuse mortgage interest and property taxes—they’re separate deductions
- Ensure your property taxes are paid in the correct tax year
To further lower your taxable income, consider if you qualify for other deductions like moving expenses or if you’re eligible to write off a storage unit during relocation.
Property Taxes and Farms: Do They Apply?
If you’re involved in agriculture or rural property management, you may wonder do farms pay property taxes?
The answer is yes—farms do pay property taxes, and just like residential property, they can often deduct them. Learn more in our post Do Farms Pay Property Taxes?.
These deductions can significantly affect your year-end returns. Our tax prep services are designed to help rural and urban property owners alike.
Additional Tips: Legal Fees, Storage, and Moving Costs
Want to go deeper into deductions? Simplicity Financial covers more than just property taxes. Check out:
- Are Legal Fees Tax Deductible?
- Can You Write Off Storage Units on Taxes?
- Can You Claim Moving Expenses?
If your financial picture includes real estate, job changes, or relocation, you may be eligible for additional tax savings.
Our comprehensive approach ensures nothing is missed, and you receive all the support you need—completely remotely.
Need help figuring out if your property taxes are deductible? We’re here to help: Contact Simplicity Financial Today 💼
Frequently Asked Questions About Property Tax Deductions
Are property taxes deductible if I take the standard deduction?
No. You must itemize to deduct property taxes. The standard deduction and itemized deductions are separate—you cannot combine them.
How much of your property taxes are tax deductible?
Up to $10,000 combined with other state and local taxes (or $5,000 if married filing separately). Rental properties are not subject to this limit.
Are real estate property taxes deductible for investment purposes?
Yes, rental and investment property owners can deduct 100% of property taxes on Schedule E as a business expense.
Are property taxes tax deductible in California?
They’re federally deductible, but not at the state level. Californians must itemize their federal return to claim the deduction.
What closing costs are tax deductible for rental property?
Deductible costs include real estate taxes paid at closing, mortgage interest, and some legal and loan-related fees.
Where is Simplicity Financial located?
We’re based in California but support clients nationwide with secure remote services. Simplicity Financial is just a click away from wherever you are.
Disclaimer: This article is for informational purposes only and does not constitute financial or tax advice. Always consult a certified tax professional or the IRS for personalized guidance.
