Can You Write Off Real Estate Taxes? SALT Cap and Limits

You can write off real estate taxes on your federal return if you itemize deductions, but the amount you actually deduct is limited. For the 2026 tax year, real estate taxes on property you own personally are grouped with your other state and local taxes and capped at a combined $40,400 for single filers, heads of household, and married couples filing jointly ($20,200 if married filing separately).¹ Taxes on rental or business real estate follow a different set of rules and are not subject to that cap.

What Counts as a Deductible Real Estate Tax

Federal law allows a deduction for state and local real property taxes that are based on the assessed value of land and permanent structures.² That kind of tax, called an ad valorem tax, is what most homeowners think of as their annual property tax bill. To qualify, the tax must be levied uniformly at a like rate on all real property in the community, and the proceeds must go to general government purposes.³

You need a legal ownership interest in the property during the period the tax covers. When you and a seller split a property tax bill at closing, only your share, covering the time you actually owned the home, is yours to deduct.²

Timing matters too. Individual taxpayers generally use the cash method, so a tax is deductible in the year you actually pay it to the taxing authority. If your mortgage servicer collects property taxes through escrow, the deduction lands in the year the lender forwards the funds to the local government, not the year you paid into escrow.

The SALT Cap Limits What You Can Write Off

The Tax Cuts and Jobs Act first capped the deduction for state and local taxes at $10,000 starting in 2018. The One, Big, Beautiful Bill Act, signed into law in 2025, raised that cap to $40,000 for the 2025 tax year, with a 1% annual increase through 2029. For 2026, the cap is $40,400 for single filers, heads of household, and married couples filing jointly, and $20,200 for married taxpayers filing separately.¹

The cap covers everything you deduct on Schedule A as state and local tax combined: real estate taxes, personal property taxes, and either state income taxes or state sales taxes, whichever is larger.⁴ Say you pay $30,000 in real estate taxes and $15,000 in state income taxes. You have $45,000 in qualifying SALT, but you can deduct only $40,400 on a 2026 return. The remaining $4,600 gives you no federal tax benefit. The cap applies no matter how many properties you own.

Unless Congress acts again, the higher cap expires after 2029 and the limit is scheduled to revert to $10,000.

Income Phase-Down for High Earners

Higher-income taxpayers face a further reduction. For 2026, if your modified adjusted gross income exceeds $505,000 ($252,500 if married filing separately), the cap begins to shrink. The reduction equals 30% of the amount your income exceeds the threshold, and your cap cannot fall below $10,000 ($5,000 if married filing separately).³

For a single filer with modified adjusted gross income of $605,000 in 2026:

Income above the threshold: $605,000 − $505,000 = $100,000
Reduction: $100,000 × 30% = $30,000
Reduced SALT cap: $40,400 − $30,000 = $10,400

That filer’s SALT deduction is limited to $10,400. Once the reduction crosses $30,400, the cap hits the $10,000 floor, which is effectively the same limit that applied before the recent increase.

Rental and Mixed-Use Property

Property taxes on rental real estate are a business expense reported on Schedule E, not Schedule A.⁵ Because they’re a trade or business expense, they are not subject to the SALT cap, and you can write off the full amount regardless of the total.⁶

If part of your property is rented and part is personal, such as a duplex where you live in one unit and rent the other, you split the tax between the two uses. You can allocate by room count, square footage, or another reasonable method. The rental share goes on Schedule E free of the cap, and the personal share goes on Schedule A subject to the cap. The same split applies if you convert a personal residence to a rental partway through the year, allocated by days of each use.⁷

If you take the simplified home office deduction, you don’t allocate any property taxes to the business. You deduct the full amount as an itemized deduction on Schedule A.⁸

One boundary worth flagging: property taxes on foreign real estate held for personal use are not deductible on Schedule A under the current SALT rules. Foreign rental or business property may still qualify as a business expense.

Co-op Owners

If you own shares in a cooperative housing corporation, the co-op pays the property tax on the entire building, not you. Federal regulations let you deduct your proportionate share of the co-op’s real estate taxes as if you had paid them directly.⁹

Your share is generally based on the ratio of your co-op stock to the total outstanding stock. If your monthly maintenance covers taxes along with other costs like building upkeep or mortgage principal, only the tax portion is deductible. The co-op should give you a statement breaking that out. That share still counts toward your SALT cap on Schedule A.

Charges on Your Tax Bill That Don’t Qualify

Not every line on a property tax statement is a deductible tax. Local governments often bundle service charges for trash collection, water, or sewer maintenance onto the same bill. Those fees pay for services delivered to your home rather than reflecting the property’s value, and they don’t qualify as real estate taxes. Common examples include a per-gallon water fee, a flat annual trash charge, and a one-time code enforcement fee.¹⁰

Special assessments for local improvements, such as new sidewalks, water mains, sewer lines, or parking areas, are generally not deductible either. They increase the value of your specific property rather than fund general government operations.⁴ The nondeductible portion gets added to your cost basis instead. If part of the assessment covers maintenance, repairs, or interest on those improvements, that portion may be deductible, but you need to document the breakdown.¹⁰

A few other charges are also excluded:

Transfer taxes and stamp taxes paid when buying or selling a home are not deductible on Schedule A. Buyers add them to cost basis; sellers subtract them from sale proceeds.⁶
Late-payment penalties and interest on delinquent property taxes are treated as nondeductible personal interest for individual taxpayers.
Property taxes on foreign real estate held for personal use are not deductible under current SALT rules.

How to Claim the Write-Off

Real estate taxes go on Schedule A (Form 1040), the itemized deductions form. State and local real estate taxes paid during the year get entered in the SALT section, where they combine with your personal property taxes and either your state income taxes or state sales taxes. The cap, and any high-income phase-down, is applied to the combined total before it flows to Form 1040.¹¹

Itemizing only helps if your total itemized deductions beat the standard deduction. For 2026, the standard deduction is $16,100 for single filers and those married filing separately, $32,200 for married couples filing jointly, and $24,150 for heads of household.¹ If your mortgage interest, capped property taxes, charitable contributions, and other itemized expenses together fall below that number, the standard deduction gives you the bigger tax break and there’s no benefit to claiming property taxes separately.

When you do itemize, the amount you paid is what matters. Your lender may report escrow disbursements in Box 10 of Form 1098, though that reporting is optional and often blank.¹² If it is, cross-check it against your escrow statement. If you paid the county directly, keep your receipts or electronic payment confirmations. If you bought or sold during the year, the Closing Disclosure shows how the annual tax was prorated between you and the other party, and only your share counts.¹³

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
2
Office of the Law Revision Counsel. 26 U.S. Code 164 – Taxes
3
Internal Revenue Service. Instructions for Schedule A (Form 1040)
4
Internal Revenue Service. Real Estate Taxes, Mortgage Interest, Points, Other Property Expenses
5
Internal Revenue Service. Tips on Rental Real Estate Income, Deductions and Recordkeeping
6
Internal Revenue Service. Topic No. 503, Deductible Taxes
7
Internal Revenue Service. Publication 527, Residential Rental Property
8
Internal Revenue Service. FAQs – Simplified Method for Home Office Deduction
9
eCFR. 26 CFR 1.216-1 – Amounts Representing Taxes and Interest Paid to Cooperative Housing Corporation
10
Internal Revenue Service. Publication 530, Tax Information for Homeowners
11
Internal Revenue Service. Schedule A (Form 1040) – Itemized Deductions
12
Internal Revenue Service. Instructions for Form 1098
13
Consumer Financial Protection Bureau. What Is a HUD-1 Settlement Statement