Wednesday, January 8, 2014

Deducting real estate taxes paid from your income taxes

*Note:  Please contact a tax professional for tax advice*

If you are itemizing deductions on your 2013 federal income tax return, you can deduct property taxes paid on real property (land and structures) that you own.

Local fees are a different matter.  IRS Publication 530 says that “itemized charges specific to property or persons,” cannot be deducted because they are not “taxes,” even if they are paid to a taxing authority.  The publication lays out specific examples of nondeductible fees, stating that “a periodic charge for a residential service (such as a $20 per month or $240 annual fee charged for trash collection)” is nondeductible.

Generally speaking, payments for Decatur’s residential sanitation and stormwater utility, may fall into this category of nondeductible charges.  For a single-family home in Decatur in 2013, the residential sanitation charge was $235, and the stormwater charge was $75.

Other nondeductible payments include penalties and interest on delinquent taxes paid if applicable.

Tax payments toward the five funds listed on Decatur tax bills (capital, DDA, bond, the general fund, and school taxes) are deductible.

If you are deducting real estate taxes paid from your income taxes, you’ll want to keep a copy of your second installment Decatur property tax bill, which is a restatement of your total taxes owed and paid for the year (and a copy of your DeKalb tax bill) in your income tax file.  You can access a bill reflecting your payments or a receipt at

This post is intended solely to bring awareness of the distinction that the IRS draws in its official publications on the real estate tax deduction, and is not intended as instructions on how you should file or how much you should deduct.  Since individual circumstances vary, please contact a tax professional for further guidance.

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