If you make a mistake with your real estate taxes, this can end up costing you a lot of money. For this reason, it's important to have your real estate taxes cleaned up by an experienced real estate tax attorney.
Don't Simply Deduct the Escrow Amount
Some lenders will pay for your property taxes by requiring that you pay into an escrow account every month. However, the problem is that your taxes might be higher or lower than the escrow and you should not use the amount you pay as a substitute for your actual property taxes. If you make mistakes with your property taxes, you'll want to have your mistakes cleared up by a real estate tax attorney.
Don't Confuse Home Repairs and Home Improvements
Many homeowners use these terms interchangeably, but the IRS treats both of these differently. A repair is something that must be done so your home will function properly while an improvement is an alteration to your home such as the addition of a screened-in porch. Consult with a property tax attorney about how much each is worth according to the IRS.
Make Sure to Take Advantage of New Tax Law Changes
Some real estate agents do not take advantages of changes in tax laws so you will want to consult with a real estate tax attorney if you are in the process of buying a home. For example, you will not want to take advantage of deductions that are no longer considered to be red flags by the IRS.
The IRS in the past has considered a home office to be a red flag. However, the IRS no longer penalizes homeowners for including a home office in their deduction and a growing number of Americans are working from home.
Deduct Refinance Points
It's easy to forget to deduct refinance points if you refinance. After refinancing, you are required to deduct points over the course of the loan. If you are still worried about whether you are deducting points properly, you must make sure to work with a real estate tax attorney whenever you're doing your taxes.
Another requirement for first-time home buyers is to pay off the first-time buyer tax credit. This is not free money but is essentially a loan you are required to pay off. Each of these rules can be difficult to remember but making sure to follow them will save you money in the long-run.
