Real estate tax can be a confusing subject and it’s easy to make mistakes that can financially put you in a bad place. If you’re a first time investor in real estate and dread the looming tax seasons, here are five mistakes you should avoid in order to save some money on your property taxes next payment period.
Deducting the Wrong Property Tax Year
Remember, your tax deductions are only eligible for taxes you’ve paid in that year. When it comes to property taxes, some authorities are a year behind or allow you to pay your property taxes a year early.
Always double-check with your taxing authority or property tax consultant when the actual taxes were paid and if you can legally use them as a deduction on your Federal taxes.
Home Improvements and Repairs Are Not the Same
Home repairs and improvements may bring value to your home or business as an owner, but they aren’t equally valuable in the eyes of the IRS. Before you make any deductions on that bathroom renovation, make sure to speak with a tax professional to ensure that you don’t make a tax slip-up.
Getting Escrow Amount and Actual Taxes Paid Mixed Up
When the time comes to claim deductions on your property taxes, don’t get the escrow amount your lender puts towards your bill confused with your actual payment. Your lender will usually put aside a little above or a little less than what your true property taxes are.
For example, if your property tax bill was $2,000.00, your lender may have collected $1,900.00 or $2,100.00. When determining what to deduct without earning an audit in your name, always go with the true taxes paid and not the escrow amount collected.
Accepting the Initial Property Tax Assessment
Just because your property tax assessment throws a large sum your way, doesn’t mean it’s the correct one. Contesting your property taxes doesn’t have an impact on your future payments, so we say, contest whenever possible.
Tax assessors aren’t perfect and they make mistakes all of the time. From the wrong property measurements, to overlooking the value of your property compared to similar lots, without contesting your taxes, you could easily pay thousands more than you should.
Not Working With a Property Tax Consultant During Tax Season
Finally, most of the mistakes made during tax season could be avoided with the help of a property tax consultant. Our job is to sit down with you, review the facts and help you understand what your true property tax payment should look like.
From property tax contests to general help with starting a payment plan with your taxing district, a property tax consultant is your best bet for keeping your taxes in line.
Avoid Costly Tax Mistakes With The Hegwood Group
Making any of the related tax mistakes could cost you thousands a year. Don’t let a slip up force you to pay more than necessary. Trust the property tax consultants of The Hegwood Group to help you make the right decisions around your property taxes.
We’re ready to start saving you money! Contact us today to learn more about our services and schedule a free consultation.