Christmas Eve is exactly two weeks from today. The end of the year is just three weeks away. It's not too late to take advantage of tax breaks before we close the books on 2015, though. Here are a few homeowner tax tips to consider before this year ends.
Homeowner Tax Tips
The biggest and arguably most important of the homeowner tax tips I can give you is to always consult your tax preparer or accountant before taking any deductions. They should be up to date on any tax changes that come along throughout the year. Even so, it is your signature on the paperwork. You are ultimately held responsible for any errors. That being said, make sure you keep the following homeowner tax tips in mind when filing next year:
Home Office Deductions - So many of us work at least part-time from home. The first of my homeowner tax tips is in regards to your home office. In order to be considered as a tax deduction, you must have a dedicated work space set up somewhere in your home. That can be a spare bedroom, a closet, a corner of the dining room or the garage. The amount of space doesn't matter as long as it is only used for work-related activities. Calculate the total space used. Then, divide this by the total square footage of your home. You can then deduct that percentage of your expenses, such as utilities, repairs, insurance, mortgage payment, depreciation and other services. You'd be surprised how much this can add up over the course of a year. A more simple way to figure out your deduction is to take your square footage and multiply it by $5. See IRS Publication 587 for more details.
Relative Mortgage Assist - The second of my homeowner tax tips is in regards to monetary gifts. Have you been helping your elderly parent with their mortgage payment? That's fantastic. However, unless you can claim them as a dependent, you won't see any tax benefit from this. There are several factors involved in being able to claim a relative as your dependent, too. The best way for anyone to get any tax benefit from your generosity is to "gift" your parent the mortgage amount rather than pay the lender directly. However, there is a $14,000 annual limit for gift giving before you incur a gift tax. Keep that in mind.
Property Taxes - The last of my homeowner tax tips has to do with your property tax bill. Property values can change dramatically year after year. Not every county is well staffed enough to handle the workload. You may be paying taxes on a value that is outdated. This can work out to be a big chunk of change in some cases. If your value has gone down but your taxes have not, you can try to appeal your tax bill. Contact your assessor's office first. If you are unhappy with the result, take your appeal to the local board. Worst case scenario is that your appeal will be denied and your payment will stay the same. You don't have anything to lose but time in this situation.
These homeowner tax tips are well worth considering before the end of the year. I am not a tax professional. Always consult with them first. Do you have any homeowner tax tips you would like to share? Please do so in the comments below.
Matt Irvin, Flexible Solutions to Fit Your East Bay Property Management Needs
Originally posted on my Contra Costa Property Management blog here: http://www.mattirvin.com/blog/homeowner-tax-tips.
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