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Top Denver Homeowner Tax Deductions

By Marianne Bandy

Real Estate Agent with Bandy Homes

February 12, 2016 08:59 AM

Owning a home provides many tax benefits -from the time you purchase up to the time you decide to sell it. The second biggest expense for homeowners, after the mortgage, is usually property taxes. Here are some ways to boost your tax savings by taking advantage of these homeowner tax deductions.

Home Improvement Tax Deduction

When you make some upgrades and home improvements in your Denver home, such as adding a room or installing central air conditioning, consider tracking those expenses as they may help you reduce your taxes in the year you sell your house. Tax deductions for some home improvements can help you save money on your taxes. You can possibly get a Federal energy-efficient tax credit up to $500 for installing storm doors, air-conditioning and heating systems.

Also, installing equipment that uses renewable energy makes you eligible for the Renewable Energy Efficiency Property Credit. This credit covers 30 percent of the cost of equipment and installation. This credit expires this year on Dec. 31st.

Also, consider checking with your local gas or electric utility. They might offer rebates for installing certain types of equipment.

Mortgage Interest and Refinancing Deductions

By owning your home, you are eligible to receive many tax benefits and some tax deductions are available when you're refinancing a mortgage in general. You can deduct taxes on rental properties, interest towards your mortgage, refinancing and mortgage interest for an additional property. If you use your second home as a rental, you must not use it personally for more than 14 days at the property or spend more than 10 percent of the number of days you rent it out.

Property Taxes

Property taxes that homeowners pay every year are fully deductible from income taxes. However, if your money is being held in escrow for the purpose of paying property taxes, you cannot claim this deduction until the money is actually taken out of escrow and paid. In addition, if you receive a partial refund of your property tax, this reduces the amount of the deduction you can claim.

The Senior Property Tax Exemption for senior citizens in Colorado was created for qualifying seniors and the surviving spouses of seniors who previously qualified. Taxpayers 65 years and older as of January 1st, who have owned their property for at least 10 consecutive years and occupy the property as their primary residence may qualify for the Senior Exemption. The exemption reduces the actual taxable value of qualified residential property by 50% of the 1st $200,000 of taxable value.

Accurate Assessment to Lower Your Property Taxes

Real property tax is based on the property value and is determined by the property’s taxable assessment and tax rates of the jurisdiction where the property is located. The assessor determines the value by deducting applicable property tax exemptions and homeowners should be aware of the possible mistakes in the valuation of their home. They have to be certain that they pay a reasonable amount based on the true value of their property.

Colorado is on a two-year reappraisal cycle, meaning all properties are re-valued every odd-numbered year. It’s too late to do anything for the 2015 values, but look for an appraised value mailing from your county in the spring of 2017. Then contact us for guidance on how to successfully protest the valuation. As a homeowner, you have plenty of options available to decrease your tax burden where you can use your tax savings for daily expenses and emergencies.

This article is meant to provide general information on how Denver homeowners can maximize their tax benefits. It should not be relied upon as tax or legal advice applicable to particular transactions or circumstances. Always consult a tax professional for such advice.

Let the professionals at the Bandy Team help you buy or sell a Denver property, contact us for a no-obligation consultation. If you’re thinking about buying Denver Real Estate, we can show you some terrific properties, including real estate for sale in Castle Rock, homes for sale in Parker, as well as, properties in Aurora.