How to claim the property tax deduction: A helpful guide

Homeownership can be expensive. But, fortunately, some of the costs that come with owning a home, like property taxes, can help you save some money. When you itemize deductions on your income tax returns and meet IRS requirements, your property tax payments can reduce your taxable income – and your tax bill. Before you file, make sure you understand how the property tax deduction works.

What is the property tax deduction?

Is property tax deductible?¹ It depends on how you file your taxes, but in general, yes.

Think of the property tax deduction as a small break on the property taxes you’ve already paid for your home. It’s part of what’s known as the SALT deduction, which stands for state and local taxes.

If you’re a homeowner, this write-off might include the taxes you paid at closing and your annual property taxes based on your home’s assessed value. In some cases, you also can deduct personal property taxes on your car, boat, or RV – basically, anything that’s taxed based on its value.

That said, there are limits on which taxes you're allowed to write off. Everyday service fees, such as trash pickup, utilities, or home renovation projects, don’t count as property taxes under IRS rules.

But if you know what qualifies and what doesn’t, this deduction can be one of those tax perks that make homeownership just a little more affordable.

What types of properties are tax-deductible?

Let’s break down which property taxes may qualify for a deduction.

• Your primary residence
• A second home
• Boats
• Vehicles
• Land

What types of taxes or expenses are nondeductible?

Like most tax breaks, there are limitations on what qualifies for this benefit. Certain types of properties and payments don’t fit the IRS rules. This means that you can’t claim them when tax time rolls around.

Here are a few examples of expenses that don’t count towards this write-off:

• Taxes on property you don’t own. You can only claim property taxes on properties or assets that are legally in your name.
• Taxes on commercial or rental properties. Properties used for business purposes are subject to a different set of tax rules. So, they can’t be used for the SALT deduction.
• Unpaid or outstanding taxes. You can only deduct taxes that have already been paid.
• Transfer taxes. Any taxes you paid when buying or transferring the ownership of a home aren’t deductible.
• Home renovation costs. Any upgrades, repairs, and remodels don’t qualify as deductible property taxes.
• Local improvement costs. Fees tied to things like sidewalk or road construction in your neighborhood aren’t eligible for this deduction.
• Utilities and services. Bills for things like trash, sewer, or other services aren’t considered property taxes.

How does the property tax deduction work?

To write off your property taxes, generally, two things must be true:

• You plan to itemize your deductions
• You paid property taxes on a home or eligible property during the tax year

That means if you choose to take the standard deduction, you can’t deduct property taxes on top of it. For 2025, the standard deduction is $15,750 for individuals and $31,500 for married couples filing jointly.

There’s really no wrong answer here. When you're deciding whether to take the standard deduction or itemize your taxes, the right choice comes down to what works best for you and your pocketbook. Take a moment to compare both options and see which one can help you save more before it's time to file.

How much can be deducted?

Sure, it would be nice if you could write off every dollar you pay in taxes. But in reality, the IRS sets limits on how much you can deduct each year for state and local taxes, including property, income, and sales taxes, which all count toward the same cap. Understanding these limits can help you maximize your deductions.

Itemized property tax deduction

When you itemize, the property taxes you’ve paid during the year can be part of your SALT deduction. The IRS allows married couples filing a joint return to deduct up to $40,000 in state and local taxes, and $20,000 if you're married filing separately.

Remember that this limit is a combination of all your state and local taxes, not just your property taxes.

Standard deduction

Choosing not to itemize your deductions? No problem, you can still claim the standard deduction to lower your taxable income.

For 2025, the IRS standard deduction amounts are:

• $31,500 for married couples filing jointly or qualifying surviving spouses
• $23,625 for heads of household
• $15,750 for single filers or those married filing separately

How to claim the property tax deduction

If you add up your deductions and find they’re higher than the standard deduction, itemizing is probably the better choice.

Before you dive into filing, though, there are a few things to take care of first.

1. Double-check the eligibility of your deductions

Start by double-checking that you qualify for every deduction you plan to claim. If you claim a deduction that you’re not eligible for, even by mistake, it can raise red flags with the IRS.

If you’re comfortable handling your taxes on your own, tax software can walk you through the process. However, since the tax code is constantly evolving and can become complicated quickly, it's worthwhile to engage a tax professional for assistance.

While it may cost more up front, a tax advisor can help you find deductions you may have otherwise missed. Plus, hiring someone takes the hassle out of doing it alone and gives you peace of mind knowing everything’s filed correctly.

2. Get a copy of your property tax records

When you have the necessary paperwork ready, filing your taxes becomes much smoother. It also gives you proof to back up your deductions if the IRS ever has questions.

You can request your property tax records from your local tax office, or you can find them online. Make sure to keep copies of these documents for your records.

And remember, you can only deduct property taxes you actually paid during that tax year. For example, 2024 property tax payments can’t be claimed on your 2025 tax return.

3. Check your escrow account

Most homeowners pay their property taxes through an escrow account. If that's you, ensure you're not claiming your escrow payments as a property tax deduction.

Generally, you can only claim the amount your lender sends directly to your local tax office. You can find that number on Form 1098. Since your escrow balance can change each year, the amount paid into the account may not match the amount used to pay taxes.

4. Use Schedule A to file

Once your deductions are confirmed and your documents are ready, you can move on to filing Schedule A of Form 1040. This is where you’ll report your property tax deduction on your federal tax return.

Ways to save more on your property tax deductions

Before wrapping up your filing, it's worth checking whether you've reached the deduction cap. If you haven't, you can save more by writing off additional state or local taxes. Taking this extra step can help you maximize your deductions and keep a little more money in your pocket.

Other property deductions

Property tax deductions don't just apply to your home. Therefore, if you own other property that qualifies, such as a second home, vehicle, boat, or RV, you may also be eligible to deduct those property taxes. Again, because tax rules can vary, make sure to consult with a tax professional to verify whether your other property qualifies.

Prepaying property taxes

Prepaying your property taxes might be another way to maximize your deduction, but only if the tax was already assessed for the year you’re claiming. Because rules vary by location, check with a tax professional to confirm that your prepayment qualifies before you file.

Ways to save if you’ve already reached the capped amount

Now, if you’ve already reached the SALT deduction limit, there are still some other ways you can decrease your tax liability even further.

Federal energy incentive

Thanks to the Inflation Reduction Act, homeowners can claim a 30% federal tax credit for qualifying clean energy systems, like small wind turbines, solar panels, geothermal systems, and battery storage technology.

Must have installed and started using your clean energy system by Dec. 31, 2025, to qualify for the full 30% tax credit. After that, the credit will gradually decrease, dropping to 26% in 2033 and 22% in 2034, before expiring entirely on Jan. 1, 2035.

Keep in mind, though, that some related programs under this credit may end for expenses that are paid after 2025, so it’s best to confirm your eligibility with a tax professional before starting your project.

You can check out the NAHB’s energy tax credit update to learn more.

Other home-related incentives

Energy improvements and SALT deductions aren’t the only ways you can save during tax time. Sometimes, homeowners can claim deductions for home office expenses or upgrades that improve the home's safety or accessibility.

For example, if you’ve added a ramp or updated a bathroom to make your home more accessible, those costs may qualify as a medical deduction. And if you use part of your home just for work, you could deduct a portion of your home expenses, too.

State tax credits

If you need to file a state income tax return, you may be eligible for tax breaks for things like energy-efficient upgrades, home improvements, or even property ownership for lower-income homeowners.

Claiming state-level incentives can help you cut your tax bill, so it's worth seeing what your state offers. However, before claiming any deductions or credits, be sure to consult with a tax professional.

The bottom line: Deducting property taxes offsets tax liabilities

Claiming SALT deductions, like your property taxes, can lower your taxable income if you qualify. However, here's the key: you must know which ones apply to you. That way, you'll see whether itemizing or taking the standard deduction gives you the bigger benefit.

Saving money doesn’t have to stop at tax time. Refinancing your home loan with Rocket Mortgage is another way to lower your monthly mortgage payments and give your budget a little more flexibility each month.²

¹This article is for informational purposes only and is not intended to provide financial, investment, or tax advice. You should consult a qualified financial or tax professional before making decisions regarding your retirement funds or mortgage.

²Refinancing may increase finance charges over the life of the loan.

Rocket Mortgage is a trademark of Rocket Mortgage, LLC or its affiliates.