The IRS allows you to deduct state or local real estate taxes from your income, provided:
- The tax is levied on your property's assessed value, and
- The tax authority charges a uniform rate on all property in its jurisdiction, and
- The tax must be for the welfare of the general public and not for your special privilege.
You need to itemize your real estate taxes using Schedule A of IRS Form 1040. Enter the amount your deductible real estate taxes on Line 6.
You can deduct real estate taxes that you pay at the time of your loan closing and those paid during the year. This includes taxes that you pay either directly or through an escrow account.
For information on deducting your real estate taxes, see IRS Pub. 530 : "Tax Information for First-Time Homeowners."
