Tax Tips For Buyers

Some of the expenses incurred during the process of purchasing your home can be deducted on that year’s tax return. (Always consult an Accountant or CPA to discuss ALL tax related matters.) Some of these deductions may include any prepaid mortgage interest and any property taxes. These figures will be found on your settlement statement (HUD).

You should also keep all receipts and records for any capital improvements you make on your home. Because tax laws are always changing, you never know when you may benefit from saving these records.

Right now you are also entitled to claim as deductions all mortgage interest paid on primary and secondary homes. You may also deduct all property taxes on any real estate you own each year on your tax return.

Many of your moving expenses may also qualify as tax deductions also if your move is a result of a job transfer or if your move is related to a new job that is more than 50 miles away from your old job.

5 Property Tax Questions You Need to Ask

1. What is the assessed value of the property?

Note that assessed value is generally less than market value. Ask to see a recent copy of the seller’s tax bill to help you determine this information.

2. How often are properties reassessed, and when was the last reassessment done?

In general, taxes jump most significantly when a property is reassessed.

3. Will the sale of the property trigger a tax increase?

The assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale.

4. Is the amount of taxes paid comparable to other properties in the area?

If not, it might be possible to appeal the tax assessment and lower the rate.

5. Does the current tax bill reflect any special exemptions that I might not qualify for?

For example, many tax districts offer reductions to those 65 or over.

Reprinted from REALTOR® magazine ( © 2008