Are Property Taxes Deductible?

By Eric Tyson, Robert S. Griswold

With all the stress associated with mortgages, it’s a good idea to pause, recognize, and give thanks for the tax benefits of homeownership. You might be asking, “can I write off property taxes?” The short answer to the property tax deduction mystery is yes. The federal tax authorities at the Internal Revenue Service (IRS) and most state governments allow you to deduct, within certain limits, mortgage interest and property taxes when you file your annual income tax return.

You may deduct the interest on the first $1 million of mortgage debt as well as all the property taxes. (This mortgage interest deductibility covers debt on both your primary residence and a second residence.) The IRS also allows you to deduct the interest costs on additional borrowing known as home equity loans or home equity lines of credit to a maximum of $100,000 borrowed.

To keep things simple and get a reliable estimate of the tax savings from your mortgage interest and property tax write-off, multiply your mortgage payment and property taxes by your federal income tax rate. This approximation method works fine as long as you’re in the earlier years of paying off your mortgage, because the small portion of your mortgage payment that isn’t deductible (because it’s for the repayment of the principal amount of your loan) approximately offsets the overlooked state tax savings.

2017 Federal Income Tax Brackets and Rates
Singles Taxable Income Married-Filing-Jointly Taxable Income Federal Tax Rate (Bracket)
Less than $9,325 Less than $18,650 10%
$9,325 to $37,950 $18,650 to $75,900 15%
$37,950 to $91,900 $75,900 to $153,100 25%
$91,900 to $191,650 $153,100 to $233,350 28%
$191,650 to $416,700 $233,350 to $416,700 33%
$416,700 to $418,400 $416,700 to $470,700 35%
More than $418,400 More than $470,700 39.6%