No SALT cap on rentals
The $40,000 SALT cap (raised from $10,000 in 2025) introduced by the Tax Cuts and Jobs Act only applies to personal state and local taxes (including property taxes on your primary and second home). Rental property taxes are a business expense reported on Schedule E and are fully deductible regardless of amount.
What's deductible?
- Annual property taxes
- Special assessments (for maintenance, not improvements)
- Transfer taxes paid when acquiring the property (added to cost basis)
Note: property taxes paid at closing when you buy a rental are typically split between buyer and seller based on the closing date.
Personal home property taxes
Property taxes on your personal home are deductible on Schedule A if you itemize, but capped at $40,000 (raised from $10,000 by the OBBBA in 2025) combined with state income taxes (the SALT cap). If you have a home office, the business-use percentage of your property tax can be deducted on Schedule C, outside the SALT cap.
Rental property taxes: IRS Publication 527, Schedule E Line 16 (Taxes). SALT cap: IRC Section 164(b)(6). Home office: IRS Publication 587.
Track property taxes per rental
Hivebooks tracks property taxes, insurance, and expenses separately for each rental property with Schedule E reporting built in.
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