Local, state, and foreign real property taxes are generally deductible by the person who the tax is assessed to. In most cases this will be the property owner but it can be another person in some other situations. This property tax can be deductible in either the year in which they were paid or accrued. In the event that they are for non-business real property, they are deductible as an itemized deduction.
Special Assessment Tax
A special assessment tax paid for local benefits such as streets, sidewalks, and other similar improvements is not deductible if the tax was imposed because of some direct benefit to the property against which the assessment is levied. These special assessment taxes are usually added to the basis of the related property.
Selling Property Allocation
If real property is sold during the year, the real property tax deduction must be allocated between the buyer and the seller based on the number of days during the year that each party held the property. The seller is generally considered to have paid the taxes up to, but not including, the date of the sale. This allocation is required regardless of which party actually writes the check for the property tax or the method or accounting used by the taxpayer.
Personal Property Taxes
To be deductible, personal property taxes must have been assessed based on the value of the property. A tax which is based on criteria other than value does not qualify as ad valorem. An example of this would be a vehicle based on weight, year, power, or any other type of characteristic for which is not considered ad valorem.