You can’t avoid paying taxes, and we all need to pay our fair share. However, paying your fair share shouldn’t place an unjust burden on you. As a homeowner, your tax burden is doubled because you pay both income and property taxes. To decrease that burden and boost your tax savings, take advantage of these homeowner tax deductions.
Home Improvement Tax Deduction
You spend so much of your time at home, and you try to make it as comfortable a place to live as possible. If your home needs some upgrades, consider improvements that will help foot the bill for themselves.
You can get an energy-efficient tax credit of up to $500 for installing storm doors and energy-efficient insulation and air-conditioning and heating systems. Switching out your old windows for energy-efficient ones could earn you $200. This credit expires this year on December 31st. So, this year will be your last chance to take advantage of getting tax credit for making your home more energy efficient.
Property Taxes
Property taxes you pay each year are tax deductible. The amount of property taxes you paid for the year shows up on your lender’s annual statement. You must deduct them as an itemized expense on your Schedule A tax form. First-time home buyers, look at your settlement sheet to see additional tax payment data. You may deduct the portion of property taxes you paid during the first year of your home ownership.
Protesting Your Assessment to Lower Your Property Taxes
Although you must pay property taxes, you can make sure that you pay a reasonable amount based on the true value of your home and land. Many homes go over valued because assessors error in valuing a home and homeowners don’t pay attention to these mistakes. Consequently, homeowners unwittingly pay more than they should in property taxes. However, if you’ve owned your home for more than a year, you can potentially lower your property tax burden by showing that your home has been overvalued, meaning that your tax assessment claims your property is worth more than it is.
Even if the number on the tax assessment seems close, you should still consider protesting your property tax. Typical savings from a successful tax protest is over 15%! According to SmartAsset, the national median property tax paid is roughly $2,839.00. That’s about 1.192 percent of a home valued at $238,200.00. If you’re able to reduce your assessed value by 15 percent to $202,470.00 and consequently save 15 percent on your tax bill. Your new tax bill will be about 2,413.00; a savings of $426.00. To learn how to protest your assessment, read Property Tax to High? Fight it!
As a homeowner, you have plenty of options available to decrease your tax burden. The benefit is that you can use your tax savings for major life events such as weddings, vacations, and home improvements. For more assistance, call Helen at 847.967.0022 or email [email protected].