Posted by Sharon Lanen Coskren on 2/2/2018

One thing that you’ll need to think about when you’re buying a home is that of property taxes. Many first-time homebuyers don’t even consider the property taxes in the midst of their excitement of buying the perfect home. There’s many different kinds of tax issues that homebuyers might face when they purchase a home. We’ll educate you on how to tackle the issue of property taxes. 


Do Your Research


You should most definitely research property taxes before you buy a home. You don’t want to be surprised to find out that your new home will have special assessments or a huge tax rate increase in the near future. Some things to look out for:


  • Tax rate increases
  • Home reassessments
  • Supplemental tax bills


The first question that you should ask your realtor is “What is the current tax bill?” This will give you a good starting point for your property tax research. 


Supplemental Tax Bills


A supplemental tax bill is basically a new homeowner’s overlapping bill of the previous owner’s taxes. Sometimes, this can include construction or additions made to the home that have increased the property value. This is also known as a “reassessment of property value.” Work with your realtor to discover whether this will be an issue.  


Multiple Taxes For One Property


Depending upon where you are, you could face more than one kind of property tax. Special taxes imposed by states, counties and districts, as well as water and sewer can create additional fees. 


Why You Have An Escrow Account


Homeowners are often required to have an escrow account. This will set aside funds for these types of expenses. The loan company will give an estimate of the amount of taxes and insurance due. Then, costs such as taxes and insurance are taken out of this account. If you are paying these fees through an escrow account, you should keep a close eye on it. Sometimes, payments fail to be made on time. You as the homeowner are then responsible for any late fees. You want to avoid these problems by checking the account frequently.   


How Property Taxes Are Calculated


Property taxes are generally based on the value of the home. Each state and city uses their own formulas in order to calculate these fees. This is what can make property taxes a bit unpredictable. Property taxes can increase or decrease over time due to these factors that are included in each municipality’s formula.               


Tax Credits


A tax credit is a rebate that’s provided by the city or state. This could be in the form of an income tax credit. As home values have risen, so haven’t property tax bills, so these credits are welcome in today’s economy. 


Tax Deferrals


Some people are eligible for property tax deferrals. This allows the homeowner to pay all or part of the property tax until a later date when a home is sold. Many deferrals are geared towards low-income homes and senior citizens. These people would most benefit from this type of savings. Be careful though if you fall into one of these categories. Some states have much higher income taxes than property taxes, so the fees end up evening out. 


The most important thing you can do when it comes to property taxes is your research. Once you have numbers, you can make a more informed decision about purchasing a property.





Posted by Sharon Lanen Coskren on 10/13/2017

You have probably been claiming the standard deduction on your taxes up until the time you bought a home. Now that you’re a homeowner, you may want to start itemizing your deductions. Your property investment will help you to start saving money in a new way. There are many different kinds of tax breaks that are available to you. Here’s the breakdown of some of the best deductions:  


Mortgage Interest Deductions


Many times, the biggest tax break comes from deducting mortgage interest. As a homeowner, you’re able to deduct interest on up to $1 million worth of debt that was used to purchase or make improvements to your home. Each January, your lender will send you what’s called a form 1098. This lists the mortgage interest that you paid during the previous year. The form should include the amount of interest that you paid from the date you closed on the home through the end of year. 


Real Estate Tax Deductions


You’re able to deduct the local property taxes that you pay each year from your April tax forms as well. If you pay your property taxes through an escrow account, you’ll receive a statement from your lender. If you happen to pay your taxes directly, however, you’ll need to keep good records. You may have also reimbursed the seller for taxes that were paid on the home in the year you purchased it. This can be be included on your real estate tax deduction form. Payments into your escrow account cannot be deducted, as these are just set aside for future tax payments. 


Mortgage Insurance Premiums Can Be Deducted 


If you make a down payment that’s less than 20% of the home purchase price, you may have to pay monthly premiums for mortgage insurance. This is an extra fee that protects the lender if the borrower defaults on the loan. The good news is that these premiums are tax deductible. 


Home Improvement Projects May Be Deductible


You should save your receipts for all of the home improvements that you make throughout the year. This can be anything from windows to landscaping to new energy efficient heating systems. While you may not be able to make these deductions right away, if you make a large profit when you sell your home, the IRS could tax you. You’ll want these deductions available to you if this happens to save money.   


Energy Saving Homes Get Deductions Too 


Any energy saving home improvements that you make can give you an additional tax break. You can earn tax credits worth up to $500. Tax credits are more valuable than deductions since credits actually reduce your tax bill dollar-for-dollar. Other improvements work on a percentage-credit based on the cost of the improvements and the type of project that was done.        




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