This is where you can try to make sense of all those “rules” that are laid out when it comes to your property taxes. To begin the Federal guides and the State guides in most cases are going to repeat, but it is important that you know your own states property tax laws. What follows is an overview of property tax rules and some guidelines to help you conquer all these confusing definitions.
Real Estate Taxes, these you will see on a state and local level. You are charged an annual tax for the value of your property. (As any homeowner knows) You can however deduct the tax if it is based upon the assessed value of the real property and your jurisdiction charges a base uniform rate on all property in your area. There are however deductible real estate taxes. If you paid your real estate or property taxes at your settlement or at closing or if you had an escrow account from which taxes were paid. (Hint: real estate taxes on Schedule A form 1040, line 6 is where to take the deduction)
Itemization is key to claiming these deductions. If you paid real estate taxes at your settlement or closing on your new home, the amount of these taxes that you paid are deductible if you itemize. Even if you did not pay any of the taxes, when the house transferred into you name it is then considered your taxes, so you can then claim them. A quick example for those who are not sure how to itemize this. If the tax bill is 1200 per year, that breaks down to 100 dollars a month in taxes. You have been in your new home for 220 days. Divide 220 by 365 = .602 then you will multiply the taxes 1200 by .602= $722.40 So your deduction to be itemized would then be $722. Prorated for your time in the house.
There are however some things you cannot deduct as real estate taxes. Charges for services, unfortunately you cannot deduct what you pay others to service your property, even if it is your taxing authority. A unit fee for the delivery of a service ( like a fee per 2,000 gallons of water you use) your periodic charges for residential service (trash collection) or the flat fee that you may be charged for a single service provided by your local government. (Like you went on vacation and forgot to hire a lawn boy and the city comes and mows your lawn because it was past regulation height.)