What affects property taxes
How Real Estate Property Taxes Affect Income Taxes
Filing your taxes at the last minute -- or even late -- is better than not filing at all. These tax payers filed at the very last minute in Manhattan in 2000.
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After paying all this money, it would be nice to get a break. Fortunately, come April 15, you get one. As you calculate your personal income tax. you can often deduct what you have paid for real estate property taxes.
In most cases, you may deduct what you pay for state, local and even foreign real estate property taxes. These taxes are deductible from your income tax as long as:
- the taxes go toward general public welfare
- the taxes are based on your property's assessed value
- all properties in the assessment area are taxed at the same rate
You may not deduct taxes that ultimately increase the value of your property or that are charged for local benefits, such as sidewalks and sewer lines. But the news isn't all bad. Though you may not be able to deduct those taxes, you may be able to use them to increase the cost basis of your property. And some local benefits -- usually relating to maintenance and repair -- are deductible. If you're not sure if
a given property tax is a deductible expense, IRS Tax Topic 503. "Deductible Taxes" and Publication 530. "Tax Information for First-Time Home Owners," can offer some clarification.
To deduct your real estate property taxes from your personal income taxes, you'll need to file a 1040 long form and Schedule A. And you should check to make sure the standard deduction isn't better for your situation. You should also check with a licensed tax consultant.
If you own a second home, it can also offer a tax break. You can deduct both your mortgage interest and your property taxes on the second home -- again, as long as you itemize. And of course property taxes on the second home must meet the same requirements as those on your first home.
If you'd like to know more about real estate property taxes and related topics, you can follow the links on the next page.
Is Your Home the Mother of All Tax Shelters?
Generally, the tax breaks you can get as a homeowner are a very good way to save money. You can deduct the interest and the property taxes you pay on your first home as well as on additional homes you might own. You may also be able to deduct interest you pay on any home equity lines of credit linked to your properties.Source: home.howstuffworks.com