Is property tax tax deductible?

Yes, but combined state-and-local-tax (SALT) deduction is capped at $10K for personal residences. No cap on rental property.

Property tax on a primary residence is deductible as an itemized deduction on Schedule A, but it falls under the State and Local Tax (SALT) cap of $10,000. The SALT cap covers all combined state income tax + state sales tax (you pick one) + property tax. For high-tax states (CA, NY, NJ, IL, MA), homeowners often hit the SALT cap with state income tax alone, leaving zero room for property tax deduction. Investment property: property tax is fully deductible on Schedule E with no SALT cap, because it is a business expense rather than itemized personal deduction. Property tax on rental property reduces taxable rental income directly. Vacant land held for investment: property tax can be deducted on Schedule A (itemized) under the misc itemized deductions or capitalized into the property's basis (your choice). Most investors capitalize because the basis adjustment reduces capital gains at sale. Special assessments: assessments for local improvements (sewer line, sidewalk) generally are NOT deductible - they increase property basis. Annual special assessments for ongoing services (street cleaning, garbage) ARE deductible as property tax.