Can You Deduct Property Taxes on a Second Home? 2026 SALT Cap

You can claim a property taxes on a second home deduction on your federal return, but only if you itemize on Schedule A and the total stays within the state and local tax (SALT) cap. For the 2026 tax year, that cap is $40,400 for most filers, a sizable jump from the $10,000 ceiling that applied from 2018 through 2024. The deduction covers any home you own for personal use — a vacation cabin, a beach condo, a city apartment you keep for weekends. Several rules narrow which charges actually qualify, and higher earners face a phasedown that can pull the cap back toward the old $10,000 floor.

The 2026 SALT Cap and What It Covers

The One Big Beautiful Bill Act, signed in 2025, raised the SALT cap and made it permanent. For tax year 2026, the limit is $40,400 for single filers, heads of household, and married couples filing jointly, and $20,200 for married individuals filing separately.¹

That cap is a single bucket. It covers property taxes on every home you own for personal use, plus either your state income tax or state sales tax (you choose one), all added together. If you pay $12,000 in state income tax and $18,000 in combined property taxes across a primary home and a second home, your $30,000 total fits under the $40,400 ceiling with room to spare. Under the old $10,000 cap, $20,000 of that would have been lost.

The Phasedown for Higher Incomes

The new law reduces the $40,400 cap once modified adjusted gross income (MAGI) exceeds $505,000 in 2026 ($252,500 for married filing separately). Above that threshold, the cap drops by 30 cents for every dollar of MAGI over the line, with a floor of $10,000.¹

MAGI at or below $505,000: full $40,400 cap.
MAGI of $550,000: the cap drops by 30% of the $45,000 excess ($13,500), leaving $26,900.
MAGI of roughly $606,000 or above: the cap sits at its $10,000 floor.

Run the numbers before assuming the higher cap helps you. For a household well into six figures, the phasedown can quietly erase most of the increase.

What Happens After 2029

The $40,400 cap rises by 1% each year through 2029. Starting in 2030, it reverts to $10,000 ($5,000 for married filing separately) unless Congress acts again.¹

Which Charges on the Tax Bill Actually Qualify

Not every line on your property tax bill counts. The IRS limits the deduction to taxes based on the assessed value of the property (what tax professionals call ad valorem taxes) levied at a uniform rate for general government purposes.² Flat fees for trash pickup, per-gallon water charges, fixed recycling assessments — those are service fees, not property taxes, even when they appear on the same bill.³

Special assessments for local improvements that increase your property’s value — sidewalks, sewer lines, parking lots — are also excluded. One exception: if part of the assessment goes toward maintenance or interest, that portion can be deducted.¹ Your local tax authority may break this out on the bill; if it doesn’t, ask.

You also need a genuine ownership interest in the property. Paying the property tax bill on a home owned by a parent, sibling, or friend generally doesn’t produce a deduction on your return.

When Itemizing Is Actually Worth It

The property tax deduction only helps you if you itemize on Schedule A instead of taking the standard deduction. For 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.⁴ Your total itemized deductions — SALT, mortgage interest, charitable contributions, and anything else — have to clear that number before itemizing saves you anything.

For a married couple filing jointly, that’s $32,200 in combined deductions. Say you pay $8,000 in state income tax, $6,000 in property tax on your primary home, and $4,500 on a second home. Your SALT total is $18,500, still $13,700 short. Mortgage interest and charitable giving have to close the gap. If your mortgage is paid off and you don’t give much, the standard deduction usually wins.

Second Homes You Sometimes Rent Out

Renting the property changes how you report the taxes.

Rented Fewer Than 15 Days

If you rent the home 14 days or fewer during the year, the IRS ignores the rental activity. You don’t report the rental income, you don’t deduct rental expenses, and the property taxes go on Schedule A as part of your SALT total, subject to the $40,400 cap.⁵

Rented 15 Days or More

Once you cross 15 days, you split expenses between rental use and personal use based on days used for each. The rental portion of the property taxes goes on Schedule E as a rental expense; the personal-use portion still goes on Schedule A under the SALT cap.⁶ The rental share is a business expense and sits outside the SALT cap entirely, which can matter if you’re already bumping against the ceiling.

Co-Ops, Unmarried Co-Owners, and Timeshares

Cooperative Housing

If your second home is a co-op apartment, the corporation pays the property tax, not you directly. As a tenant-stockholder, you deduct your proportional share of the corporation’s real estate taxes. The share equals your shares divided by total outstanding shares, multiplied by the corporation’s deductible property taxes. The co-op will usually provide the figure.⁷

Unmarried Co-Owners

When two or more unmarried people own a home together, each deducts the property taxes they actually paid. If you split the bill from a joint account, each of you deducts your half on your own Schedule A. The co-owner who receives Form 1098 reports their portion on line 8a; the other reports their share on line 8b and lists the name and address of the person who received the form.⁸ Keep records of how you divided the payment.

Timeshares

A deeded timeshare interest can qualify for the property tax deduction if the taxes are assessed based on property value and you hold an actual ownership stake. The same SALT cap and ad valorem rules apply.³ “Right to use” timeshares that don’t convey an ownership interest generally won’t qualify, because you don’t own the underlying real estate.

Second Homes Outside the United States

If your second home is in another country, you cannot deduct the property taxes. The TCJA eliminated the deduction for foreign real property taxes starting in 2018, and the One Big Beautiful Bill Act continued that prohibition.¹ A vacation home in Mexico, a condo in France, a cottage in Canada — none of them produces a personal-use property tax deduction. Foreign properties held in a trade or business fall under separate rules.

Documentation and How to Report It

If your second home has a mortgage with an escrow account, your main record is Form 1098, the Mortgage Interest Statement. Your lender may report real estate taxes paid from escrow in Box 10.⁹ Not every lender fills it in; if yours doesn’t, ask the lender or pull the total from your escrow statement.

If you pay the tax directly — no mortgage, or taxes aren’t escrowed — your county or municipal tax office issues annual bills and receipts. Keep the receipt showing the amount actually paid, not just assessed. And remember: you deduct what you paid during the calendar year. A December 2026 bill you pay in January 2027 belongs on your 2027 return.

Review the bill line by line. Take the amount labeled real estate tax or property tax. Exclude service charges for trash, stormwater, or emergency services, and exclude special assessments for improvements unless a maintenance or interest component is broken out.¹⁰

On the return itself, enter total real property taxes from all personally used homes on line 5b of Schedule A.² State and local income taxes (or sales taxes) go on line 5a; the total on line 5d is where the SALT cap kicks in. Line 5e cannot exceed $40,400 ($20,200 for married filing separately), reduced by any income-based phasedown.¹ Most tax software handles the cap automatically once you enter each figure. Keep your records for at least three years after filing.¹¹

If You Get a Property Tax Refund Later

Successfully appealing your assessment or receiving a refund for overpayment can create taxable income. Under the tax benefit rule, a refund of taxes you previously deducted must be included in gross income for the year you receive it, but only to the extent the original deduction actually reduced your tax liability.¹²

If you took the standard deduction the year you paid the tax, you got no benefit from deducting it, and the refund isn’t taxable. If you itemized but were already at the SALT cap, some or all of the refunded amount may not have reduced your liability either, so some or all of the refund can be tax-free. Work through this carefully, or hand it to a preparer — it’s easy to over-report refund income you don’t actually owe tax on.¹³

1
Office of the Law Revision Counsel. 26 USC 164 – Taxes
2
Internal Revenue Service. Instructions for Schedule A (Form 1040) (2025)
3
Internal Revenue Service. Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses)
4
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
5
Internal Revenue Service. Publication 527 (2025), Residential Rental Property
6
Internal Revenue Service. Topic No. 415, Renting Residential and Vacation Property
7
Internal Revenue Service. Publication 530, Tax Information for Homeowners
8
Internal Revenue Service. Other Deduction Questions
9
Internal Revenue Service. Form 1098 Mortgage Interest Statement
10
Internal Revenue Service. Topic No. 503, Deductible Taxes
11
Internal Revenue Service. How Long Should I Keep Records
12
Office of the Law Revision Counsel. 26 USC 111 – Recovery of Tax Benefit Items
13
Internal Revenue Service. Federal Income Tax Consequences of Certain State Payments – Notice 2023-56