4 Things New Buyers Should Know About Property Taxes
March 16, 2023
Benjamin Franklin famously said, “Nothing is certain, except death and taxes.” But first-time home buyers who may be anxious about property taxes may need a little help understanding exactly what that will mean for them.
While your clients should be advised to consult with an accountant, an agent who not only helps them find their dream home but briefs them with some useful guidance on property taxes can earn their loyalty and respect.
Let’s brush up on the basics:
1. All taxpayers may claim the standard deduction, which reduces your income by a set amount, or itemizing deductions – whichever option cuts your tax bill the most. While many taxpayers choose the standard deduction, itemizing expenses may work best for anyone who paid mortgage interest and real estate taxes, made significant charity donations, had major out-of-pocket medical bills or had uninsured damage from fire, flood, or theft. Your tax bracket will also be considered.
2. As a new homeowner, you are able to save money on any home-related expenses, including mortgage interest and points as well as home improvements. Your lender will send you a form showing what interest you paid, but it’s important to keep careful records of everything else you spend.
3. When it comes to home improvements, energy efficient expenses for solar panels, efficient windows, and hybrid cars are all deductible, so make sure you save receipts. Improvements like heating, air conditioning or water heater systems, for example, may qualify for a credit of up to 30% of the cost of the improvement.
4. Business owners and/or the qualified self-employed who work from home may deduct home office expenses, so here again, keeping good records of all your expenditures will be useful when preparing to file. Based on the percentage of your home used for business, expenses for mortgage interest, insurance, home utilities, real estate taxes and general home repairs may be deductible.
Bobbi Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.