are real estate taxes deductible

How Much Property Taxes Are Deductible?

Real estate taxes are a must to pay when you buy or sell a home. If you were to try to figure out how much property taxes you can save on, it is hard to come up with a single number that fits the bill. In reality, the amount of property taxes you pay depends on your state of residence. To determine what you will be paying in property taxes, first look at your local tax codes and the property taxes rate, then see how the amounts apply to you as a homeowner.

If you are a home owner with a fixed home, you will be surprised to find that there is very little room to work around the fact that real estate taxes are a must to pay. While your state may allow you to take a tax deduction on your mortgage payments, this may not be enough to offset the property taxes you pay. The best way to get around this is to get a real estate loan that allows for the amount of money you save from your real estate taxes to be applied to your mortgage payments. While this will cost you a lot of interest, the savings on taxes can add up over time.

While you may be able to get away with just making the necessary repairs to your house to keep it free from damage and theft, some properties may be exempt from property taxes if they are old or not worth that much money. Even in this case, if you have a good credit rating, you can still deduct your real estate taxes as long as you have kept the property as safe as possible.

The biggest problem you will find when trying to figure out how much real estate taxes are deductible is knowing how much of the total taxes you actually pay are actually tax deductible. The IRS has developed a complex system that requires a great deal of math skills to figure out what is taxable and what is not. Most people simply do not have the skills to figure out this complicated process without the help of an accountant. When you go to buy a home, you may be required to have an appraisal done, so make sure you hire an accountant who specializes in real estate to help you figure out how much your home is worth.

Another issue that can make figuring out how much real estate taxes are deductible on a bit difficult is determining what percentage of your property taxes are based on home value. Most homeowners pay taxes based on the assessed value of their home and not the market value. Therefore, if the value of your home goes down, your real estate taxes will go up. This is true even if you have bought and sold your home several times in recent years and haven’t spent much time living there.

The bottom line is that you have to consider how much real estate taxes are going to cost you in order to figure out what amount you can deduct from your own taxes. You may not be able to figure out everything that is included in your property taxes, but that doesn’t mean that you cannot find ways to lower them and keep more money in your pocket.