Real estate taxes are deductible by a homeowner, and are shown in Form 1098 which the taxpayer receives from the lender.
- Form 1098 typically shows the amount of mortgage interest paid, real estate taxes paid, and homeowners insurance (hazard insurance) paid. Insurance is not deductible on property used as a personal residence even though it appears on Form 1098.
- Real estate taxes are deductible separately from mortgage interest on Schedule A, and from property taxes. To be deductible, real estate taxes must be based on the home’s value and assessed at least annually.
- When deducting real estate taxes, only the taxes actually paid on behalf of the taxpayer are deductible, not the amount the taxpayer paid into escrow.
If you have paid off your mortgage, you won’t receive a 1098 form from your mortgage lender. However, homeowners can still deduct their real estate taxes. They should receive a paid tax receipt from the county which they should keep with their own tax records (it should not be sent to the IRS).