Income tax property tax credits

On Behalf of | Sep 22, 2020 | tax law | 0 comments

If you are one of the many people who itemize your deductions when preparing and filing your personal Illinois income tax return, there may be many potential opportunities for items you can add as deductions.

In some situations, you may qualify to receive a credit on your state income taxes in exchange for taxes you paid on residential property in Illinois.

Residential requirements for the property tax credit

As explained by the Illinois Department of Revenue, if you wish to claim a property tax credit on your Illinois income tax return, you may only do so for a property that is your primary residence. You must own this property and have lived in it during the appropriate tax year. Farm land and vacation homes cannot count as your principal residence.

Payment requirements

You must have paid both installments of your property taxes the county assessed during the same tax year. If you paid them late, you cannot include the interest penalties and fees that you had to pay as a result. If you deducted part of your property tax as a business expense, you cannot include that portion in your income tax deduction.

5% cap on property tax credit claims

Your income tax credit may not exceed 5% of the total property tax paid regardless of your tax filing status. For example, if you and your spouse file separate tax returns, you may each claim a portion of the credit, but the total claimed by you together may not exceed 5% for a single property. If you file a joint return, your adjusted gross income must be less than $500,000.