What taxes paid on a mortgage can be claimed on a personal income tax?

Answer 1

Answer

There are four types of deductible nonbusiness taxes:

* State, local and foreign income taxes; * real estate taxes; * Personal property taxes; and * State and local sales taxes.

To be deductible, the tax must be imposed on you and must have been paid during your tax year. Taxes may be claimed only as an itemized deduction on Form 1040, Schedule A.

Deductible real estate taxes are generally any state, local, or foreign taxes on real property. They must be charged uniformly against all property in the jurisdiction and must be based on the assessed value. Many states and counties also impose local benefit taxes for improvements to property, such as assessments for streets, sidewalks, and sewer lines. These taxes cannot be deducted. However, you can increase the cost basis of your property by the amount of the assessment. Local benefits taxes are deductible if they are for maintenance or repair, or interest charges related to those benefits.

If a portion of your monthly mortgage payment goes into an escrow account, and periodically the lender pays your real estate taxes out of the account to the local government, do NOT deduct the amount paid into the escrow account. Only deduct the amount actually paid out of the escrow account during the year to the taxing authority. Yor mortgage company generally provides this to you with their year end information.