As a California taxpayer, you may be wondering whether property taxes are tax-deductible in California. The answer is yes, but there are some important things to keep in mind.
California property taxes are generally still tax-deductible for both wage earners and self-employed individuals on both state and federal tax returns. However, starting in 2018, the deduction is subject to a total cap of $10,000 for federal taxes, which includes California property taxes, California state income taxes, local taxes (such as DMV, State Disability Insurance SDI), or sales taxes paid during the year. For example, if you paid a total of $12,000 that includes all the amounts for the above items, you can only deduct $10,000 on your federal tax return.
If you itemize deductions on your federal 1040, you will deduct California taxes on Schedule A. You will use Line 5 B on Schedule A to report any taxes you paid within the year (Jan 1 to Dec 31st). If your monthly mortgage payments include your home or property real estate taxes, you can include only the amount the mortgage company actually paid to the taxing authority within the year (Jan 1 to Dec 31st).
It’s important to note that real estate taxes paid in California are not deductible on your California state taxes (CFB). However, California does allow deductions for your real estate tax and vehicle license fees on your federal tax return.
In conclusion, property taxes are tax-deductible in California for both state and federal taxes, but there are some limitations, especially on the federal level due to the $10,000 cap. If you have any other questions about property taxes or deductions, please consult with your tax advisor or your CPA. And if you’re looking for professional tax preparation services, we highly recommend reaching out to Robert Hall & Associates. They have been in business since 1971 and have a proven track record of helping clients with their tax needs for over 50 years.
