ABA Family Legal Guide

Buying and Selling a Home

Tax Considerations

Tax Considerations When Buying Your Home

What are real estate taxes?

Most homeowners have to pay taxes on the real estate they own. This is a yearly tax based on the assessed value of the property, usually paid to the local community. As a general rule, the tax is divided among the municipality (city and town), the county, school districts (including the local school district and community colleges), and other governmental units. Currently, these taxes are deductible against taxable income on your federal tax return if you itemize.

Depending on your state's laws, the amount you pay in property tax also may be deductible on your state income tax return.