Income Taxes

Tax Deductions, Property Assessments, and How Real Estate Affects Your Bottom Line

How do I reach the IRS?

To reach the Internal Revenue Service directly, call (800) TAX-1040 or visit their website at irs.gov.

Where do I get information on IRS publications?

The IRS publishes a variety of documents related to real estate taxes. These publications are available for free online at irs.gov or by calling (800) TAX-FORM. Notable publications include:

• Publication 521: Moving Expenses
• Publication 523: Selling Your Home
• Publication 527: Residential Rental Property
• Publication 534: Depreciation
• Publication 541: Tax Information on Partnerships
• Publication 551: Basis of Assets
• Publication 555: Federal Tax Information on Community Property
• Publication 561: Determining the Value of Donated Property
• Publication 590: Individual Retirement Arrangements (IRAs)
• Publication 908: Bankruptcy and Other Debt Cancellation
• Publication 936: Home Mortgage Interest Deduction

Property Taxes

Are property taxes deductible?

Yes. Property taxes levied by state and local governments (including school districts) are fully deductible if you itemize deductions on your federal income tax return.

Are taxes on second homes deductible?

Yes. Mortgage interest and property taxes on a second home are also deductible if you itemize. However, consult a tax advisor to understand limitations or exceptions that may apply to your situation.

How do property taxes work?

Property taxes are local assessments paid by homeowners—typically 1.5% of a home’s current market value, though rates vary by location. These funds help pay for essential public services such as schools, police, roads, and local infrastructure.

Taxes are assessed annually and are based on a formula that considers property value, local millage rates, and any applicable exemptions.

How is a home’s value determined?

There are three common methods:

• Appraisal
  A professional, certified appraiser evaluates your property based on size, location, condition, and recent comparable sales. Appraisals usually cost around $300 for a home valued at $250,000.
• Comparative Market Analysis (CMA)
  Prepared by a real estate agent, a CMA is an informal estimate based on recently sold homes in your area. Many agents offer this service for free to attract potential clients.
• Comparable Sales Reports
  Available from private companies or online databases for a fee, these reports provide access to recent sales information that can help you gauge current market values.

Where can I learn more about appealing my property taxes?

Start by contacting your local tax assessor’s office. Many municipalities allow for informal reviews, but most appeals must be filed formally with a county or city assessment appeals board.

You’ll likely need to provide documentation, such as comparable sales data or evidence of an appraisal, to support your claim that your home is over-assessed.

Whom to Contact

• IRS General Help: (800) TAX-1040 | irs.gov
• IRS Forms/Publications: (800) TAX-FORM
• Tax Assessment Appeals: Your local county tax assessor’s office

Understanding your tax obligations and rights as a homeowner can lead to significant savings—and help you avoid costly mistakes. Whether you’re buying your first home, selling a rental property, or appealing your tax bill, reliable tax information is a must.