Planning to Write Off Your Property Taxes on Your Upcoming Return? Here's Why You May Not Be Able To

Don't assume that tax break is a given.

When you own a home, it's not just mortgage payments you're required to cover. You also need to pay for the peripheral expenses of homeownership, like insurance and property taxes.

Recent Ascent research found that the median property tax bill in the U.S. is $2,971. But in some parts of the country, property taxes can be much higher.

No matter what your property tax bill amounts to, you may be eager to write that sum off when you file your taxes. But before you start counting on that tax break, recognize that it may not actually be in the cards.

Why you may not get to write off your property taxes

To claim a deduction for property taxes, you need to itemize your deductions on your taxes, as opposed to taking the standard deduction. But depending on your specific situation, you may not be able to write off some or all of your property taxes.

The reason? There's a $10,000 cap on the SALT deduction, or state and local tax deduction. The SALT deduction encompasses your state income taxes and also your property tax bill.

Now, let's say you earn a high wage and/or live in a state with a higher income tax rate. It's conceivable that you might use up that entire $10,000 limit on your income tax bill alone, leaving you with nothing left over toward your property taxes.

What's more, in some parts of the country, a modest home can come with a property tax bill of $15,000 a year. So, let's say that's what your property taxes look like, and you also paid $5,000 in state income taxes last year. That means you can only write off $5,000 of your $15,000 in property taxes because that deduction can't exceed $10,000.

How to lower your property taxes

You may be disappointed to learn that your property taxes can't serve as a write-off on your tax return -- or at least not in full. But one thing you should know is that if you get a higher property tax bill, you're not necessarily stuck with it.

Each year, property owners have an opportunity to appeal their property taxes. If you feel that your home's value has been over-assessed, you can file an appeal and see if a judge agrees with you. It might do the trick of lowering your property taxes.

Of course, to successfully appeal property taxes, you'll need to prove that your home has been assessed at a higher value than what it's actually worth. But if your home is assessed at $500,000, and you can find recent sales data for comparable homes in your neighborhood that only sold for $450,000, you might succeed at lowering your home value to $450,000, too. And since property taxes are calculated by taking your home's assessed value and multiplying it by your local tax rate, a drop in value could lead to a lower tax burden for you.