Types

• Property taxes that state, local or foreign governments levy on your business property based on its assessed value are tax-deductible, the IRS states. Taxes levied on your property in return for a specific benefit aren't deductible: If all the real estate on your street is taxed to put in streetlights or a sidewalk, for instance, you can't deduct your payment. A tax for infrastructure maintenance or repairs is deductible, however.
  
  

Time Frame

• If you buy or sell business real estate midway through the year, you and the other party must allocate the property taxes based on when you transferred title. If you bought the land one quarter of the way through the year, for example, you might only be able to claim 75 percent of the total tax bill as a deduction. The exact process for dividing up and claiming the taxes varies depending on whether you use cash or accrual accounting in your business.
  
  

Rentals

• If you rent out residential property, you're entitled to claim the property taxes as a deduction, the IRS states. If you use the property full-time as a rental, you can claim all the taxes; if you use the property as a vacation or second home part of the time, you'll have to apportion the tax between rental and personal use to determine how much of the tax bill you can write off.
  
  

Filing

• If you're claiming property tax as a business expense, you include it on Schedule C, the IRS form for business profit and loss; you deduct it from your business income and write the total for your business income on your 1040. If you're claiming a deduction for rental property, you use Schedule E or Schedule C, depending on how involved you are in managing the rentals. The IRS provides guidelines for figuring out if your rental role is "passive" or "active."