Considerations

• Some states provide their low-income and elderly residents with an exemption from real-property taxes. Other states provide eligible taxpayers with a homestead exemption. In the past few years, most home values dramatically decreased and county residents paid less in county real-estate taxes. Some counties, in an effort to generate revenue to compensate for the decreasing tax revenues, increased their tax base.
  
  

Benefits

• States may also assess personal-property taxes based upon the fair market value of large-ticket items such as cars. The IRS provides taxpayers a deduction for real-estate and personal-property taxes. Taxpayers who itemize their federal tax returns will itemize the tax deductions on Form 1040, Schedule A.
  
  

Effects

• Assessments for real-estate and property taxes must be applied uniformly to all residents in order for the taxpayer to deduct them. Taxpayers who escrow their real-estate property taxes may deduct the amount paid through escrow.