What this line means
The real estate (property) taxes you paid on your home during the year. Like mortgage interest, this is an indirect expense — the form multiplies the full amount by your business-use percentage to determine the business portion. Real estate taxes are in the same privileged group as mortgage interest: they are deductible even when your tentative profit on line 8 is zero. The business portion reduces your Schedule C income, and the personal portion can be deducted on Schedule A if you itemize.
Does this apply to you?
- You own the home where your business office is located and paid property taxes during the year
- You want to allocate your property tax bill between business and personal use
- You are using the regular method (Form 8829) for your home office deduction
Easy to overlook
The business portion bypasses the $10,000 SALT cap The $10,000 cap on state and local tax (SALT) deductions on Schedule A applies only to the personal portion of your property taxes. The business portion deducted through Form 8829 is a business expense, not an itemized deduction, so it is not subject to the SALT cap. For homeowners in high-tax states, routing part of property taxes through Form 8829 recovers deductions that the SALT cap would otherwise block. 1 IRS Form 8829 instructions — Line 11
Supplemental or special assessment taxes count Property tax bills sometimes include supplemental assessments, special district levies, or local improvement taxes. These are real estate taxes and belong on line 11. Filers sometimes enter only the base property tax and miss the supplemental charges that appear on a separate bill or as a line item on the same bill. 2 IRS Publication 587 — real estate tax allocation for home office
Watch out for this
Including amounts that are not real estate taxes. Homeowner association (HOA) fees, utility charges billed with your property tax, and Mello-Roos assessments for services (garbage collection, street lighting) are not deductible real estate taxes. Only ad valorem taxes — taxes based on the assessed value of your property — belong on this line. Check your tax bill carefully and exclude service charges.
Footnotes
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IRS Form 8829 Instructions, Line 11. https://www.irs.gov/instructions/i8829 ↩
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IRS Publication 587, Business Use of Your Home, Real Estate Taxes. https://www.irs.gov/pub/irs-pdf/p587.pdf ↩