Tue, Feb 09, 2010
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Income Tax versus property tax
| | Tuesday, April 08, 2008 @ 03:29 PM EDT
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Contributed by: creativewealthmanage
creativewealthmanage Properties
Read more archived articles about Tax Strategies
We Ignore our Property Tax but hire professionals to handle our Income Tax every year. With America in a housing market never before seen it is important that we
make sure our homes are valued properly.
Like many American’s last month I went and visited my accountant to prepare and file a federal tax return. Many thoughts raced through my mind on how to spend my newly
found fortune, new clothes, a well-deserved night out or possibly pay down the credit card. Although all of them sounded appealing, like many of us I used my tax return to pay my property tax bill. This is a common way for many; use our tax return to pay our property tax.
This vicious cycle has been played out every spring since I became a homeowner. It was not until last year that I thought about all of the planning and preparation that went in to my federal taxes only to glance at my property tax bill and write a check without question or a second thought.
After utilizing many available tax deductions and credits many may find that the amount of
federal taxes paid is less than the amount of their annual property tax.
When we examine our local property tax the same concepts apply as federal tax, however we rarely take notice. For example most municipalities allow for tax deductions and credits to offset the amount of property tax due. Many states give you a lower tax rate just for owning the home as your primary residence, being a veteran, or if you are over 65 years of age to name a few.
While these credits and deductions are important to take note of the more important issue is what your local government has valued your home at. This can often make the most impact to taxpayers. Known as your assessed value, this is what is used to multiply your local tax rates in order to arrive at the amount of property tax you will owe for the year. This can be one of the most overlooked aspects to homeowners, especially as of late in this current housing
meltdown.
It is first important to find what your local assessor has for a property description of your home as mistakes often occur. Verify the square footage, the number of bedrooms and other data on your property record card is correct. Most assessors never look at your home, rather employ mass appraisal systems and rely on public record information to assess your homes value.
Why are we entrusting our local taxing authority to tell us our homes value? According to the Tax Foundation over 60% of homes in America are over assessed. More than half of us are paying too much property tax. All areas do allow taxpayers to dispute their annual assessment while less than 5% take corrective action. Maybe the IRS should take note of our local taxing authorities and make certain assumptions about everyone’s annual income, I would imagine a few more than 5% would disagree with the figure they propose.
The bottom line is we need to take notice of our own property taxes just as closely as we do our federal income tax filings. In this current housing market where a 10% reduction in home value could equal $500 in tax savings it is up to each taxpayer to assess their own assessment.
Note: The website LowTaxRate.com is a free resource for taxpayers to better understand their property tax, tax assessments and offers help to dispute inflated tax assessments. It is important that we all make certain we are paying our fair share of tax.
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