If you itemize deductions, you may be able to deduct your real property taxes, personal property taxes, and state income taxes.

Real property taxes that are subject to state, local, or foreign property tax are deductible in the year you pay or accrue them. The taxes must be based on the assessed value of the property and must be charged against all properties within the jurisdiction where the property is located.

• If the property is bought or sold during the year, you may only deduct a pro rata amount for the number of days you owned the property.
• Taxes you paid to a financial intuition to hold in escrow are deductible in the year you paid the funds.
• Local tax imposed for the sake of improvement, such as for streets, sidewalks, and sewer lines, are not deductible.

Personal property taxes are deductible if the tax is imposed on a yearly basis and is based on the assessed value of the property. Taxes not based on the value of the property are not deductible.

State and local income taxes withheld from your wages during the year are deductible in the year they were withheld. State and local income tax estimates or prior year payments are also deductible in the year you paid them.

Foreign income taxes usually qualify as an itemized deduction or as a tax credit in the year you paid them.

For tax years 2005, 2006, and 2007 you have the option of deducting state and local income taxes or state and local sales tax. You cannot deduct both. To claim the sales tax deduction you can either add up all sales tax paid for the year (if you have the receipts) or you can claim a standard amount based on your state and income level. The IRS has provided an easy-to-use calculator to help you figure the standard amount of deduction you are eligible to claim.

• Federal income tax
• Social Security tax
• Stamps
• Transfer of property tax
• Estate and inheritance tax
• Water, sewer, or trash collection
• Vehicle licensing fees based on vehicle weight

For more information please refer to IRS Tax Topic 503 - Deductible Taxes.