5 Property Tax Breaks You Should Be Claiming
There aren't many people, outside of Warren Buffet, who want to pay one penny more in taxes than they have to. You are probably one of them, so here is a list of five property tax breaks you should be claiming provided you qualify.
Homestead Exemption
The homestead exemption actually is a multi-tax break of sorts. It usually includes within it school taxes and county taxes along with optional exemptions from other taxing units such as the city or a special district. It is applied according to the assessed tax value of the home and lowers your taxes by reducing the assessed value of the home by a set amount, meaning a lower tax bill.
You must apply for this exemption between January 1 and April 30. No early applications will be accepted.
Further exemptions are made for being over 65 and for being disabled. These can be applied for at any time of year but it must be within the year you turned 65 or became disabled.
Mortgage Interest
This tax break can be taken off your income taxes if you itemize (and the itemized deduction is larger than the standard deduction). It is a tax break that has been on the chopping block more than once in Washington, D.C. So far it has survived. Your mortgage company typically sends you a form 1098 in January showing how much interest you paid on your loan for the tax year.
This only applies to a mortgage on your primary residence or else a second home must be used as the collateral for a loan.
Property Taxes
Most property taxes are deductible. This includes property taxes levied by county, city, and state. The taxes must be uniformly charged against all properties within the taxing unit’s jurisdiction as well as based on the assessed value of the home.
The deduction does not apply to civic improvements such as property taxes for sidewalks, streets, and sewers.
Private Mortgage Insurance
Private mortgage insurance, or PMI, is required on most mortgages where the down payment is less than 20%. PMI remains part of your house payment until you have paid the mortgage down to that point. It is also tax deductible as long as the mortgage originated after January 1, 2007. The deduction is phased out at 10% per $1,000 for taxpayers with an adjusted gross income of $100,000 to $109,000. Those with incomes above that do not qualify.
Energy Efficiency Upgrades/ Repairs
Green building and living are being encouraged through tax deductible energy efficient upgrades. This is really a tax credit and includes the cost of materials. This means it is taken directly off the tax you owe no matter your income.
The limit to this tax credit is 10% of the total bill for the materials up to $500. Other energy efficient items qualify for a separate tax credit.
You may not be eligible for all of these deductions. But if you aren’t deducting the ones you qualify for you are leaving money on the table. Or maybe you just like to pay taxes.
That’s OK. Apparently Warren Buffet does, too.
