I've owned my first home since January of 2025. I just got my first property tax bill and I've always heard from everyone around me that you should pay in full at the beginning of the year so you can deduct it from your taxes.
There is no discount or reason I'm seeing to pay in full instead of quarterly and I've seen some information that you don't have to pay in full as you are simply deducting what you pay for the year.
Is this true? Because it would be significantly easier for me to pay quarterly than to pay in full but I also don't want to lose out on any tax benefits this year.
First year as a home owner confusion about property tax deduction
byu/Xx_TheCrow_xX intax
Posted by Xx_TheCrow_xX
6 Comments
First, do you have enough itemized deductions to exceed the standard deduction?
If you do, then amounts paid in 2025 can be included as an itemized deduction on your 2025 tax return, and amounts paid in 2026 can be deducted on your 2026 return.
Why aren’t your property taxes being withheld and paid as part of the escrow by your mortgage lender?
There is no need to pay it on the first of the year. Anything you pay during the calender year will be deductible. You will only be able to itemize if your total itemized deductions, including property taxes and mortgage interest, exceed the standard deduction for your filing status.
The IRS doesn’t care when it’s paid. You only enter the sum total property taxes paid as a single number on your return. You can make one payment or 365. They all get added up and that’s what end s up getting used to calculate your return.
But before you do anything, do you have a mortgage on this house? If so are funds being set aside from your monthly payments in an escrow account by your mortgage holder? If they are then send them the tax bill and they will pay it out of your escrow account.
The technique that you may be referring to is bunching deductions into a single tax year. In the case of property taxes, bunching would involve paying a tax bill that is due in January before the end of the year. It could also involve delaying a December payment into January, but that is a little more risky because of possible penalties from the municipality.
The same technique can be used with state and local taxes (prepaying estimated taxes normally due in January) and with charitable donations.
The overall goal is to be able to use the itemized deductions greater than the standard deduction in the bunched tax years, and then revert to using the standard deduction in the off years. Note that the allowed deduction for state and local taxes (SALT), including property taxes, has been capped at $5k/$10k in recent years. starting in 2025, the limit increases to $20k/$40k (single/married).
Everything depends on what itemized deductions you have. For you, it may make more sense to delay paying this year’s property taxes until 2026, but then next year pay all of the property taxes you can before 12/31/26. This is because by bunching all the deductions into 2026, you may have more itemized deductions than the standard deduction. In 2025, it’s likely that only 1 year of property taxes won’t be enough for you to itemize, or the benefit may be very small compared to if you bunched in 2026