In 2024, we bought a new house (new to us) to be our primary residence. So, we had been living in House #1, for over 20 years, and had paid the property taxes in Jan. 2024, Then bought House #2, in April 2024, Paid some property taxes at the closing, and ALSO Paid the normal property taxes in Dec. 2024. Moved into House #2 in October, still owned House #1 and were remodeling it to sell it. At the end of 2024, we owned BOTH houses, and had paid property taxes on BOTH in 2024. Also owned a residential lot, and paid those property taxes in Dec. 2024. **There are no mortgages. So now, working with Turbo Tax on 2024 taxes. When it asks how much we paid in property taxes… Do I add both homes together, PLUS the taxes paid at the closing of House #2? Does the lot we own just not count for any deductions? Thanks for any info.
I’m pretty sure that you just add up all the property taxes and enter that number. Years ago, when I still took the itemized deduction instead of the standard deduction, I would “bunch” the property taxes into 2X every other year. So I paid the 2001 property tax in Jan 2001, and I paid the 2002 property tax in Dec 2001, and took both those deductions in 2001. Then I skipped 2002. Then paid 2003 property taxes in Jan 2003, and paid the 2004 property taxes in Dec 2003, and took both those deductions in 2003. Etc. So every even year I had fewer itemized deductions (or none sometimes), and every odd year I had more itemized deductions.
However, with the very high standard deduction that exists today (I think it’s $30,000 now for MFJ), the benefit of taking itemized deductions are MUCH lower, and the hurdle to make it worth doing is much higher. If you paid $25,000 in property taxes, and $3,000 in sales taxes, and contributed $5,000 to charity, then your total itemized deduction will be $33,000. If you are in the 22% tax bracket, then that itemized deduction will save you a total of $660 in taxes.
All of those property taxes on houses and land that you paid in 2024 are deductible on Schedule A for 2024, unless you already used the property tax as another deductible expense, like a rental property. Also, if your total property taxes plus any other state/local taxes paid are in excess of $10k, only $10k of the taxes will count toward your Schedule A deductions.
AJ
Not exactly. Property taxes and sales taxes are both subject to the SALT deduction limit of $10k. So you would have $15,000 in allowable deductions, which means that itemizing wouldn’t benefit you at all compared to the standard deduction.
AJ
Yep, I forgot about that … because I haven’t itemized in many years.
I’ll say. I just took a first pass at taxes yesterday, and even with $25,000 in medical expenses and $20,000 in solar/battery purchases and the rest, I’m still better taking the standard deduction. I would have thought all that would bump me over the hump, but I guess not.
I haven’t itemized in many years. Even a couple of years ago when I had medical bills, but they didn’t even make it past the 7.5% of AGI hurdle anyway.
Would this lead to a tax credit rather than an itemized deduction?
Yes, I thought this is how it was going to work, but TurboTax led me to it under “deductions”. I’m out of town right now but will drill down further when I get home.