Deductible Taxes

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There are three types of deductible non-business taxes:

  1. State, local and foreign income taxes

  2. Real estate taxes

  3. Personal property taxes


You can deduct any estimated income taxes paid to state or local governments and any prior year's state or local income taxes paid during the tax year.

Generally, you can take either a deduction or a tax credit for foreign income taxes, but only for taxes on income that is subject to U.S. taxation.

Deductible real estate taxes are usually any state, local, or foreign taxes on real property.  If a portion of your monthly mortgage payment goes into an escrow account and your lender periodically pays your real estate taxes to local governments out of this account, you can deduct only the amount actually paid during the year to the taxing authorities.

Personal property taxes are deductible when they are based on the value of personal property, such as a boat or car.  To be deductible, the tax must be charged to you on a yearly basis, even if it is collected more than once a year or less than once a year.



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