You can still deduct property taxes even on paid-off properties.
Deducting Property Taxes
The Internal Revenue Service recognizes five types of deductible non-business taxes, including state and local real estate taxes. Deductible real estate taxes include property taxes imposed by state and local governments. It also doesn't matter to the IRS if your home is paid off or not. When filing taxes, you can deduct property taxes for the tax year in which they were paid.
Local Benefits Taxes
Counties and municipalities also charge property owners what are called "local benefits" taxes. Typical local benefits include municipal parks and marinas for which property owners are also taxed. In certain circumstances, local benefits taxes are tax-deductible, according to the
IRS. However, deductions for local benefits taxes are limited to repair, maintenance or interest charges related to such benefits.
State Property Taxes
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