What Aspect of Your Property Tax is Tax Deductible?

2020 is finally coming to a close and many Texans are starting to think about the impending tax season. One of the biggest perks that people try to gain when filing their taxes are deductions.

Work equipment they’ve bought and miles traveled for work are usual deductions. But did you know that parts of your property taxes are also deductible on your Federal tax return?

Here’s a look at how you can successfully approach a property tax deduction when you file during the first half of the new year.

Who can Claim Property Tax Deductions?

Not anyone can simply claim a property tax deduction because they live or work on a property. In order to benefit from your property on your taxes you must be the owner of the property.

Even if you are the person who pays the taxes on a property, if your name isn’t listed as a legal owner, you cannot claim any type of deduction.

As a general rule, in order to benefit from any type of deduction, the taxes in question must be charged directly to you.

What is Legally Able to Be Deducted?

Real property taxes that you pay on your real estate that you own is purely deductible on Federal forms. However, the government is aware that some taxing authorities continuously increase property taxes, and these claims could become quite high without a limit.

Therefore, in 2018, the Tax Cuts and Jobs Act (TCJA) was put in place. This means that real property is only deductible in amounts that do not exceed $10,000.

The TCJA also limits this amount to $5,000 for married couples that file their taxes separately.

Here is what is currently tax deductible from your property taxes:

  • Real estate taxes paid on your primary residence
  • Vacation homes that you own
  • Land that you own

Remember, though, all personal property taxes you use in deductions must have already been paid before filing.

What Isn’t Tax Deductible?

Remember, though, not all real tax is deductible, so you can’t just slap your entire property tax payment onto your tax return.

Here are the following property tax charges that you can’t itemize in your deductions:

  • Water delivery services
  • Trash collection fees
  • Fees you’ve paid for HOA fines
  • Charges assessed for public projects like sidewalk installation and street repairs outside of your home.
  • HOA assessments
  • Above all, you can no longer deduct property that you own outside of the United States.

Need Help Determining Your Deductions? The Hegwood Group is Here for You

If you have any questions about how your property taxes could benefit your federal return, the property tax consultants of the Hegwood Group can help. We know local taxes from the inside, out and will be able to give you the information you need to navigate the rocky landscape of taxes.

Save some money this tax season with the Hegwood Group. Contact us today to schedule a free consultation.

Texas Real Estate Tax Tips