5c — State and Local Real Estate Tax Updated for tax year 2025

What this line means

The amount of state and local real estate (property) taxes you paid during the year on property you own. This includes property taxes on your primary residence, a vacation home, and land you own. Taxes on rental properties are deducted on Schedule E instead, not here. This amount is combined with your other SALT deductions and subject to the $40,000 SALT cap ($20,000 MFS) for 2025.

Does this apply to you?

• You own a home and paid property taxes during the year
• You own a vacation home or second home and paid property taxes on it
• You own vacant land and paid property taxes on it
• You paid property taxes at closing when you bought or sold a home (your share of the prorated taxes)

Easy to overlook

Property taxes paid at closing count When you buy or sell a home, property taxes are prorated at closing. Your share of the taxes — shown on the closing disclosure — is deductible in the year of closing. Buyers often overlook this because the tax was paid through escrow at closing, not as a separate bill. ¹ [SOURCE: IRS Schedule A instructions — Line 5c]

The $40,000 SALT cap is a big improvement but still limits high-tax states Under the new $40,000 SALT cap (raised from $10,000 by the OBBBA for 2025-2029), most homeowners can now deduct their full property and state income taxes. But in the highest-tax areas of New Jersey, New York, California, and Connecticut, filers with combined SALT well above $40,000 still lose part of their deduction. The cap phases down to $10,000 for filers with MAGI above $500,000. ² [SOURCE: General filing pattern — SALT cap impact on property tax deduction]

Watch out for this

Including property taxes on rental properties on Schedule A. Rental property taxes are a business expense deducted on Schedule E (Supplemental Income and Loss), not an itemized deduction on Schedule A. Only property taxes on your personal residences and non-rental land go here.

Related lines on your return

• Line 5a — Schedule A — State and local income or sales tax
• Line 5e — Schedule A — SALT deduction after the $40,000 cap
• Schedule E — Supplemental Income and Loss (where rental property taxes are deducted)