Homeownership on Long Island comes with its perks, but the hefty property tax bills in Nassau and Suffolk Counties can feel overwhelming. A common question we hear at Jones Hollow Realty Group is: Are real estate taxes deductible? The good news is yes, they often are, providing significant relief for many taxpayers. However, the rules can be complex, especially under federal and New York State tax laws, so let’s break it down with a focus on our local market.
First, on your federal income tax return, real estate taxes (synonymous with property taxes) are deductible if you itemize deductions on Schedule A of Form 1040. This includes taxes paid on your primary residence, second home, or even vacant land, as long as they’re based on the property’s assessed value. For Long Island residents, where average property taxes hover around $12,000-$15,000 annually (higher in affluent areas like Great Neck or Sag Harbor), this deduction can shave thousands off your taxable income. However, the Tax Cuts and Jobs Act of 2017 capped the state and local tax (SALT) deduction at $10,000 for single filers or married couples filing jointly. This “SALT cap” has been a hot topic in high-tax states like New York, and while there’s ongoing debate in Congress about raising or eliminating it, as of 2026, it remains in place.
On the state level, New York allows deductions for real estate taxes on your state return, but you must itemize there too. If you’re a landlord with rental properties in places like Long Beach or Riverhead, these taxes are deductible as business expenses on Schedule E, without the SALT cap applying. Additionally, if you paid points on a mortgage or refinanced, those might qualify as deductible interest, indirectly related to your tax strategy.
Timing matters—taxes are deductible in the year you pay them, so prepaying before year-end can maximize benefits. But beware of alternative minimum tax (AMT) implications, which might limit deductions for higher earners. Always consult a tax professional, as rules can change; for instance, energy-efficient home improvements might qualify for additional credits that interact with your property tax deductions.
Brad Wilson, broker of Jones Hollow Realty Group, shares this insight: “In Long Island’s competitive market, knowing that real estate taxes are deductible can make high-tax areas more appealing. It’s not just about the bill—it’s about smart financial planning that turns ownership into a wealth-building tool.”
Unsure how this applies to your situation? Our knowledgeable representatives at Jones Hollow Realty Group can connect you with tax experts and help you understand the full picture when buying or selling. Compliment their expertise by reaching out today—they’re ready to assist in navigating these deductions and more.