Top Homeowner Tax Deductions That Decrease Your Tax Burden
Property Tax Appeals, worth it!
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. As a result, you can use your tax savings to go on a vacation, increase your child's college fund, build upon your retirement fund, or complete another home improvement project.
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 homebuyers, 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 homeownership.
File a Tax Appeal: Lower Your Burden and Freeze Your Property Taxes for 3 Years!
If you have not yet received your Notice of Assessment, you should no later than July 1. If you have not, feel free to reach out to me. I would be happy to find it online for you.
WHAT IS A NOTICE OF ASSESSMENT?
Assessor's, usually through the use of a computer program, determine the current year value of your home. This is not the most effective way to determine the value. It may or may not work in your favor. There is value in disputing it if you feel the assessment is too high. Why go through the process? Even if you do not win the appeal, upon the final decision of the appeal, your property taxes will be frozen for the next 3 years. The tax value will be unfrozen under the following circumstances:
If there is a change of ownership
If there is a County-wide reassessment of a market area
If you filed permitted renovations or
If the property value is re-appealed in the following tax cycle
HOW DO YOU DISPUTE A NOTICE OF ASSESSMENT?
You can file an appeal in person, online or by mail within 45 DAYS FROM THE DATE OF THE NOTICE. It will require documentation, a market analysis and appearing in person.
OR
Hire a Property Tax Consultant to handle the process for you. There is a fee for this service but as Property Tax Consultants have experience with the process which may lead to a reduction in your property taxes, it might be well worth it. For more information, please follow the link below.
https://www.campbellandbrannon.com/practice-areas/property-tax-appeal/
Typical savings from a successful tax protest is over 15%!
If you would like to handle your own appeal
Read your assessment letter. Make sure your assessment letter has the correct information about your property.
There are three key mistakes assessor make when assessing property. These mistakes include:
Outdated Historic Sales Data: Sometimes assessors will use sales data from previous years. Because the real estate market is fluid, this data changes quickly, as a result; this data can over value your home.
Mass Appraisal Methods: Also, when assessors use mass appraisal methods, they do not take into account all the market adjustments that occurred over time. Consequently, the sales data can't always produce useful comparable properties.
Living Area: Does the assessment letter show the correct number of bathrooms and bedrooms? Does it report the correct size of your lot? .5 acres differs greatly than 5.0 acres.
I can provide you with three to five comparable properties to yours, hopefully, these comps can then be used to support your claim that your home is overvalued. You'll have 45 days to file an appeal of your assessment, so you’ll want to get the comps as soon as your assessment arrives.
You'll then need to fill out a form and follow specific instructions regarding your supporting evidence. Typically, it's not necessary for you to appear at the review. The review can take one to three months to complete, and you'll receive a decision in writing.
The majority of assessment appeals are successful. However, if at first you don't succeed, appeal. You'll need to pay a small filing fee for an independent appeals board to hear your second appeal. This process could take up to a year to complete, so you'll need to decide whether it's truly worth it.
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.
Also, installing equipment that uses renewable sources of energy makes you eligible for the Renewable Energy Efficiency Property Credit. The credit covers 30 percent of the cost of equipment and installation. This credit also expires this year on December 31st.
Mortgage Interest and Refinancing
If your mortgage payment makes you cringe each month, you’ll be glad to know you can deduct taxes on the following:
* Interest towards mortgage
* Mortgage payments for additional property
* Rental properties
* Refinancing and home equity lines of credit (HELOC) up to $100,000 of debt.
If you own multiple properties, the mortgage interest on additional property is deductible as well. The cool thing is that it doesn't have to be a house. It can be a boat or RV; as long as it has cooking, sleeping, and bathroom facilities, it counts as additional property.
Regarding using your second home as a rental, you need to vacation at least 14 days at the property or spend more than 10 percent of the number of days you rent it out.
Furthermore, you can claim points on your mortgage the year you paid them if the following happened:
* The loan was to purchase or build your main home
* Payment of points is an established business practice in your area and the points were within the usual range
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.
To find out more about your tax saving options as a homeowner, check out tax information for homeowners. You can also contact me directly and I'll gladly lead you in the right direction towards saving you money on your taxes.
Note: Georgia bill SB436 requires that the purchase price of your new home be used as the fair market value in the year following the purchase. There is a storm water fee and a street light fee. DeKalb County collects a 1% sales tax (HOST) used to reduce property taxes. 85% of the money collected goes towards increasing the homestead exemption. Only owner occupied homes get this credit, there is a big difference in taxes in DeKalb County between owner occupied homes and rental homes