Posted On: January 18th, 2017 11:23PM
You should get every deduction you’re entitled to without fear of making mistakes that’ll bring the tax man to your door.
Mortgage Interest Deduction
Itemized deductions can be a great way to lower your tax bill but newbie homeowners may be used to claiming the standard deduction because they haven’t had enough of the expenditures that qualify them for itemized filing.
You can deduct the interest portion of your mortgage payments which might mean that your itemized deductions will now exceed the standard. The savings are at their maximum early on, when most of your mortgage payments go to interest. Over the years, the balance shifts, and for some it might mean they lose the advantage. But there’s a way to keep the savings maximized.
The trick is to use an alternating approach to filing. One year you maximize by prepaying whatever you can for the next year, such as property taxes and charitable contributions. The next year, you take the standard deduction.
Challenging Property Tax Bills
Property tax is a big chunk of money, and sometimes that chunk is bigger than it needs to be. Values go up and down over time. The assessor reassesses areas in bulk from time to time. Often these bulk reassessments result in a valuation 10%, 20%, even 50% more than a home’s value.
Reassessments happen at different times, depending on location, and local and state laws will govern what you must do. Typically, you have fewer than 30 days to challenge the assessment. Start by checking the assessment data -- size of the lot, number of rooms, square footage, etc. -- to be sure the facts are correct. If not, the appeals process may be easy.
Work with your real estate pro to get market data, such as information on comparable properties -- known as “comps”. Ask for 3 similar “comps” from your Realtor. You can hire an independent appraiser, although that can run $350 to $600 undercutting the savings you might ultimately receive.
If the information you have collected indicates your assessment is high then appeal the property tax bill first to the assessor’s office. If the result is unsatisfactory, you may be able to appeal to a local board or possibly to a court. The worst case scenario is the value stays the same.