Released: July 26, 2008

Property tax relief, without itemizing

Source: Kenneth Harney, Washington Post (Free Registration)

The giant federal housing and foreclosure relief legislation heading for enactment contains a little-noticed - but potentially far-reaching - change in real estate tax policy.

It would permit millions of homeowners who do not itemize on their federal tax filings to claim a deduction for at least a portion of their local property taxes - up to a maximum of $500 for single filers and $1,000 for married owners filing jointly.

Intended as a one-year economic-relief measure for people who do not itemize, the new write-off is highly likely to become a permanent part of the tax code, tax experts say. Currently, it would apply only to tax returns filed on 2008 incomes and cost the federal treasury an estimated $1.2 billion to $1.5 billion for the year.

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