New Real Estate Tax Deduction

If you take the standard deduction (because you don’t itemize your deductions), you can take up to an additional $500 real estate tax deduction for the home real estate taxes that you pay.

Originally this additional deduction was set to be effective only for the year 2008. Last Thursday, October 2nd, the President signed into law an extension to make that deduction apply to the 2009 year also.

This mostly benefits seniors who don’t have high home mortgage interest or high income taxes, or anyone else who doesn’t itemize their deductions but owns their own principal residence.

If your real estate taxes are less than $500 (hard to find in Wisconsin!) then your deduction is limited to the amount of the real estate taxes paid.