Can You Deduct Property Taxes on a Second Home: SALT Cap Rules

Yes, you can deduct property taxes on a second home, but only if you itemize on Schedule A. For the 2026 tax year, those taxes fall inside the combined state and local tax deduction, which is capped at $40,400 for most filers ($20,200 if married filing separately). That single cap covers property taxes on your primary home, property taxes on your second home, and your state income or sales taxes added together. The cap is much higher than the $10,000 ceiling that applied from 2018 through 2024, following changes made by the One Big Beautiful Bill Act signed in mid-2025.

What the SALT Cap Covers

Federal law lets you deduct state and local real property taxes, but it groups them with state income taxes (or state sales taxes, if you choose those instead) into one combined pool. Property tax on your primary residence, property tax on your second home, and state income tax all draw from the same $40,400 bucket in 2026.¹p>

For most second-home owners, that ceiling is high enough to absorb property taxes on both properties without hitting the limit, unless the state income tax bill is also very large. The old $10,000 cap forced many owners in high-tax states to leave real deductions on the table; the current figure gives most households room to breathe.

Phasedown for Higher Incomes

The full $40,400 does not apply to everyone. If your modified adjusted gross income exceeds $505,000 in 2026, the cap starts shrinking by 30 cents for every dollar of MAGI above that threshold. It cannot fall below $10,000.¹ A filer with MAGI around $606,000 or more effectively lands back at the old $10,000 floor. The $505,000 threshold rises by roughly 1% each year through 2029.

The 2030 Reversion

The elevated cap is scheduled to sunset. Starting in 2030, the SALT limit drops back to $10,000 ($5,000 married filing separately). Between now and then, the cap increases about 1% per year. Anyone buying a second home partly for the property-tax deduction should factor that reset into the math.

What Counts as a Second Home

The IRS treats a property as a residence if it has sleeping, cooking, and toilet facilities. That covers ordinary houses, condominiums, co-ops, mobile homes, house trailers, and boats equipped with a galley and a head.² A property missing any of those three amenities generally does not qualify. Raw land with a shed on it, for example, is not a residence.

You can designate only one property as your second home in a given year. If you own two vacation properties in addition to your primary residence, you pick one for tax purposes. You may switch mid-year if you sell one or buy a new one, but you cannot treat both as second homes at the same time.² Frequency of use is not part of the test; the structural requirements are.

Charges That Look Like Property Taxes but Aren’t

A line on your tax bill is not automatically a deductible tax. This catches many second-home owners in resort areas, where local governments layer fees and assessments on top of the real property tax.

Special Assessments for Local Benefits

If a charge is levied because your property specifically benefits from a new sidewalk, sewer line, street paving, or similar improvement, it is not deductible as a property tax, even when it appears on the same bill. The reasoning is that such assessments raise property value, so they resemble a capital improvement more than a tax. The narrow exception: any portion of the assessment that covers maintenance, repair, or interest on an existing improvement is deductible. You have to be able to break out those portions from the rest of the charge. If you cannot, none of it is deductible.³

Service Fees

Itemized charges for services delivered to your specific property are not deductible either. The IRS names per-gallon water charges, trash collection fees, and one-off service fees as examples.⁴ If your vacation home’s bill mixes property taxes with a water or waste line item, only the property tax portion counts.

Transfer and Stamp Taxes

Stamp taxes and transfer taxes paid when you buy or sell a second home are not deductible as real estate taxes. If you’re the buyer, add them to your cost basis in the property. If you’re the seller, subtract them from the amount realized on the sale.⁵

To be deductible, the tax has to be assessed uniformly against all property in the jurisdiction and used for general governmental purposes.⁶

If You Rent Out the Second Home

Renting changes things. The IRS classifies your property as a personal residence for the year if you use it personally for more than 14 days or more than 10% of the days it is rented at fair market value, whichever is greater.⁷ Stay under that line and the property is a rental in the IRS’s eyes, which changes where the property taxes go on your return.

The 15-Day Rule

If you rent the home for fewer than 15 days during the year, you do not report the rental income at all. The property is simply a personal residence for tax purposes, and property taxes go on Schedule A subject to the SALT cap.⁷

Splitting the Bill on Mixed-Use Property

If you rent the home for 15 days or more and your personal use also crosses the 14-day/10% threshold, property taxes get divided between rental and personal use. Divide rental days by total days of use (rental plus personal), and that percentage of your property taxes goes on Schedule E as a rental expense. The remainder goes on Schedule A, subject to the SALT cap.⁷ The rental portion on Schedule E sits outside the SALT limit, which can matter if your state and local tax total is already near the cap.

Personal use days are defined broadly. They include days you or a family member use the property (unless the family member pays fair market rent and treats it as a main home), days used under a home-swap arrangement, and days anyone stays below fair market rent. Days you spend doing substantial repair or maintenance work do not count as personal use.⁷ Keep a written log of who stayed, when, and at what rate; it is your primary defense in an audit.

How to Actually Claim the Deduction

The deduction only helps if your itemized deductions exceed the standard deduction. For 2026, the standard deduction is $32,200 for married couples filing jointly, $16,100 for single filers and married filing separately, and $24,150 for head of household.⁸ Owning a second home often pushes total itemized deductions past those thresholds once you combine property taxes on two homes with other itemizable expenses.

Enter property tax payments on line 5b of Schedule A. Include only taxes on property not used for business; the rental-use portion belongs on Schedule E.⁶

Escrow Payments

If your lender collects property taxes through escrow, you can deduct only the amount the lender actually paid to the taxing authority during the year, not what you deposited into escrow.⁵ Your annual escrow statement shows the disbursement figure. Lenders often hold a cushion, so monthly deposits will not usually match the actual tax payment.

Records to Keep

Hold on to property tax bills, proof of payment such as bank statements or canceled checks, and escrow disbursement statements. These should show the payment date and the tax year the bill covers. If you pay a bill early — say in December for one due the following January — the deduction lands in the year you paid. Individual taxpayers use cash-basis timing, so the payment date is what controls.

1
Office of the Law Revision Counsel. 26 U.S. Code 164 – Taxes
2
Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction
3
eCFR. 26 CFR 1.164-4 – Taxes for Local Benefits
4
Internal Revenue Service. Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses) 5
5
Internal Revenue Service. Publication 530, Tax Information for Homeowners
6
Internal Revenue Service. Instructions for Schedule A (Form 1040) (2025)
7
Internal Revenue Service. Publication 527 (2025), Residential Rental Property
8
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026