What I learned in tax class last night: You don't have to itemize on Schedule A this year to be able to deduct your real estate taxes.
The IRS has added an option to increase your Standard Deduction by $500 or $1,000 (MFJ), as long as your real estate taxes are higher than those amounts.
Example: Sarah and John own their home and have an adjusted gross income of $50,000. They paid off their mortgage but still owe real estate taxes every year, which were $2,000 last year. They file Married Filing Joint, and get a standard deduction of $10,900, which reduces their taxable income to $39,900. By adding their real estate taxes to their Standard Deduction, it increases by $11,900, which reduces taxable income to $38,900. The difference in tax between the two income levels is $150 in taxes.
The ceiling on the deduction is $1,000. You can find out more about all of this at www.irs.gov or by consulting a tax advisor.
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