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Pub 587 Line 7 Worksheet: Real Estate Taxes and the SALT Cap

Updated November 5, 2026. Quick answer: The Line 7 Worksheet in Publication 587 (2025) splits the real estate taxes on a home you used for business between the part that fits under the overall limit on state and local tax deductions and the excess. You need it only if you itemize and your state and local taxes are over the base limit; line 10 goes in column (a) of line 7 and line 11 carries to line 15 of the home-business worksheet.

When the Line 7 Worksheet applies

The publication says “If you are claiming the standard deduction, do not report an amount on line 7. If you are itemizing deductions, figure the amount to include on line 7 as follows.” Step 1 is a test: “If the total of your state and local income (or if elected on your Schedule A, general sales) taxes, real estate taxes, and personal property taxes is not more than $10,000 ($5,000 if married filing separately), enter all the real estate taxes attributable to the home in which you conducted business in column (b) of line 7.” “If you do not meet the condition of Step 1, use the following worksheet to figure the amount to include in column (a) of line 7.”

The worksheet belongs to the Pub 587 Worksheet To Figure the Deduction for Business Use of Your Home, which Schedule F filers and some partners use. Schedule C filers who use actual expenses use Form 8829, where lines 8 to 15 play the same role. The overall limit it applies is the one explained on Schedule A lines 5d and 5e.

Lines 1 to 6

LineWhat it asks
1“Enter your state and local income taxes (or, if you elect on Schedule A, your state and local general sales taxes) that are personal expenses”
2“Enter all the state and local real estate taxes you paid on the home in which you conducted business”
3“Enter any other state and local real estate taxes you paid that are a personal expense and not included on line 2”
4“Enter your state and local personal property taxes that are a personal expense”
5“Add lines 1 through 4”
6“Multiply line 2 by the percentage on line 3 of the Worksheet To Figure the Deduction for Business Use of Your Home”

Line 6 is the business share of the home’s real estate taxes. Line 5 is the full state and local tax total that the Schedule A limit applies to.

Lines 7a to 7d: which overall limit goes on line 8

LineWhat it asks
7a“Subtract line 6 from line 5”
7b“Is line 5 less than or equal to $10,000 ($5,000 if married filing separately)?” If yes, “Skip lines 7c and 7d. Enter $10,000 ($5,000 if married filing separately) on line 8. Then proceed to line 9.”
7c“Is line 7a greater than or equal to $40,000 ($20,000 if married filing separately)?” If yes, “Skip line 7d. Enter $10,000 ($5,000 if married filing separately) on line 8. Then proceed to line 9.”
7d“Would your modified adjusted gross income on line 4 of the State and Local Tax Deduction Worksheet in the Instructions for Schedule A (Form 1040) be less than or equal to $500,000 ($250,000 if married filing separately) if you entered $40,000 ($20,000 if married filing separately) on line 8 of this worksheet, next?” If yes, “Enter $40,000 ($20,000 if married filing separately) on line 8. Then proceed to line 9.” If no or unsure, “See Iteration instructions, later.”

The figures belong to the 2025 edition. The same limit is explained for later years on the SALT cap page.

Lines 8 to 11

LineWhat it asks
8“Enter the overall limit on the deduction for state and local income, sales, and property taxes from line 7b, 7c, 7d, or Step 6 of the Iteration instructions (as applicable).”
9“Subtract line 7a from line 8. If zero or less, enter -0-”
10“Real estate taxes reported on line 7. Enter the smaller of line 6 or line 9 here and in column (a) of line 7 of the Worksheet To Figure the Deduction for Business Use of Your Home”
11“Excess real estate taxes reported on line 15. Subtract line 10 from line 6”

Line 11 is the part of the business share that the limit cuts off. The publication sends it onward: “then include the amount from line 11 of the Line 7 Worksheet in column (a) of line 15 of the Worksheet To Figure the Deduction for Business Use of Your Home”. On Schedule A, “only include the personal portion of your real estate taxes on line 5b of Schedule A.”

The iteration instructions (answer No or Unsure on line 7d)

The reason for the loop is that the home-business deduction changes your income, and your income changes the limit. The publication starts it with “Enter $10,000 ($5,000 if married filing separately) on line 8 of the Line 7 Worksheet.” Step 2 is “Complete lines 9, 10, and 11 of the Line 7 Worksheet.” Steps 3 and 4 refigure your income and “Figure your modified adjusted gross income on line 4 of the State and Local Tax Deduction Worksheet.” Step 5 recomputes the limit, and “Enter the overall limit on the deduction for state and local income, sales, and property taxes determined in Step 5 on line 8 of the Pub. 587 Line 7 Worksheet. Repeat Steps 2 through 4.”

The loop stops when the answer settles: “Is the difference between the current calculation of modified adjusted gross income and the most recent prior calculation of adjusted gross income more than $1?” If the difference is more than $1 you continue. If it is not, the publication says “Use the deduction for expenses for business use of your home determined in Step 2” and the other final amounts to complete your return.

Examples with invented numbers

Illustration, not an IRS example. All three are computed from the inputs shown. The first stays under the base limit, the second is over the line 7c test, and the third uses the higher limit on line 7d, assuming the income test is met.

LineEntryValue
1State and local income (or general sales) taxes that are personal expenses (invented)$3,000
2Real estate taxes paid on the home you used for business (invented)$4,000
3Other personal real estate taxes (invented)$1,000
4Personal property taxes (invented)$500
5Add lines 1 through 4 (computed)$8,500
6Line 2 times the 20% business percentage from line 3 of the home-business worksheet (computed)$800
7aLine 5 minus line 6 (computed)$7,700
7bIs line 5 at most $10,000? Yes, so skip 7c and 7dYes
8Overall limit, entered from 7b$10,000
9Line 8 minus line 7a (computed)$2,300
10The smaller of line 6 and line 9 (computed)$800
11Line 6 minus line 10 (computed)$0

Case 1 ends with $800 on line 10 and nothing on line 11 (computed): all of the business share fits.

LineEntryValue
1State and local income (or general sales) taxes that are personal expenses (invented)$30,000
2Real estate taxes paid on the home you used for business (invented)$6,000
3Other personal real estate taxes (invented)$8,000
4Personal property taxes (invented)$1,500
5Add lines 1 through 4 (computed)$45,500
6Line 2 times the 25% business percentage from line 3 of the home-business worksheet (computed)$1,500
7aLine 5 minus line 6 (computed)$44,000
7bIs line 5 at most $10,000? NoNo
7cIs line 7a at least $40,000? Yes, so skip 7dYes
8Overall limit, entered from 7c$10,000
9Line 8 minus line 7a, but not below zero (computed)-0-
10The smaller of line 6 and line 9 (computed)-0-
11Line 6 minus line 10 (computed)$1,500

Case 2 ends with nothing on line 10 and $1,500 on line 11 (computed): the state and local taxes outside the home are already over the limit, so the business share is excess.

LineEntryValue
1State and local income (or general sales) taxes that are personal expenses (invented)$12,000
2Real estate taxes paid on the home you used for business (invented)$5,000
3Other personal real estate taxes (invented)$9,000
4Personal property taxes (invented)$2,000
5Add lines 1 through 4 (computed)$28,000
6Line 2 times the 30% business percentage from line 3 of the home-business worksheet (computed)$1,500
7aLine 5 minus line 6 (computed)$26,500
7bIs line 5 at most $10,000? NoNo
7cIs line 7a at least $40,000? NoNo
7dWould modified adjusted gross income be at most $500,000 with $40,000 on line 8? Assumed yes for this illustrationYes
8Overall limit, entered from 7d$40,000
9Line 8 minus line 7a (computed)$13,500
10The smaller of line 6 and line 9 (computed)$1,500
11Line 6 minus line 10 (computed)$0

Case 3 ends with $1,500 on line 10 and nothing on line 11 (computed).

Edition

This page reads Publication 587 (2025), Business Use of Your Home, the file irs.gov served on 2026-11-05. Worksheet titles and line numbers belong to that edition, so check the label printed on the worksheet in your own copy before you follow a line reference.

Common mistakes

  • Using the worksheet on the standard deduction. The publication says not to report an amount on line 7 in that case.
  • Entering the line 6 amount on line 7 without checking the limit. Line 10 is the smaller of line 6 and line 9.
  • Putting the excess in the wrong place. Line 11 goes to column (a) of line 15, not back to line 7.
  • Answering the line 7d question from memory. If you are unsure, the publication sends you to the iteration instructions.

Related: the Pub 587 business-use worksheet, Schedule A lines 5d and 5e, and Publication 587.

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Sources

Read from the IRS documents linked above on November 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.

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