Are real estate taxes deductible if I use home for business?

Question

I use home for business - work as a contractor from home, on my home computer, but there is no area for exclusive use - desk and computers are also used for personal purposes. So I do not qualify for home office deductions.

I do want to count real estate taxes for my home, in my itemized deductions on Schedule A.

But the instructions for Schedule A say "Enter on line 5b the state and local taxes you paid on real estate you own that wasn't used for business". There is no mention of "exclusive use" here or any other conditions.

So I have my home, real estate, and it is "used for business" in the sense that I work from home.

Does that mean I can't deduct my real estate taxes at all, on my Schedule A (and neither as home office deduction)?

Answer 1

Real estate taxes for your home are deductible as an itemized deduction on Schedule A whether or not you own a business. The phrase “wasn’t used for business” that you see on Schedule A really means the amount that wasn’t deducted as a business expense elsewhere. So yes, if you are itemizing deductions, you can include the real estate taxes for your home on Schedule A.

If you were taking the home office deduction, you would have the option of including a percentage of your home real estate taxes as part of the home office deduction. If you did this, it would reduce the amount you could then deduct on Schedule A; you can’t deduct the same expenses twice on different parts of your tax return. (Choosing to deduct some of the real estate tax as a business expense instead of an itemized deduction would reduce the amount of self-employment tax you would pay.)

Since you are not claiming the home office deduction, the real estate taxes are fully deductible on Schedule A if you are choosing itemized deductions.