Archive for January, 2009

Should you be paying less property taxes?

Can there actually be a bright spot in the current housing market? Home values in many areas have plummeted in recent months leaving many families with little or no equity in their homes. There is also no end in sight from this recent disaster. It appears that we may still be in the beginning phase of the housing crisis.

With all this said there may be a small advantage of the crisis for some people. Property taxes are based on the accessed value of your home and if the value of your home is decreasing then so should your property taxes. Now, the PVA or property valuation administrator isn’t just going to give you a discount on your property taxes, you are going to have to do a little work.

First, you have to be sure that the value of your home has actually declined. We realized this when we tried to refinance our home for a second mortgage to pay a down payment on some land we intended to purchase. After getting the appraisal back we realized that our home wasn’t worth as much as the PVA had it valued. It may not be worth paying for an appraisal because this can cost several hundreds of dollars, but with a little market research you can get a good idea of how much your house is worth.

You may want to consider doing your own detailed appraisal on a spreadsheet to help sway the PVA’s opinion. Include other home values that are comparable to yours, take detailed photos of your home and other surroundings. Try to find recent home sale prices in your neighborhood and compare them to your home based on the square footage, age, etc.

The next step is to contact the PVA and let them know your concern. They still aren’t going to automatically adjust the value of your home based on your findings. They will review the information you give them and then reevaluate the value of your home based on their own apprasials.

If you still disagree with their findings then you can probably take legal actions and have the situation accessed by an independent review board. This however can start costing a lot of money, but if you are overpaying taxes by a large amount it may be worth the extra cash.

Tax deductions from mortgage interest

Every year millions of Americans buy a home for different reasons. Home ownership creates a sense of accomplishment and pride. The IRS also offers another benefit of buying a house. Home owners can deduct the interest paid and points paid on the home mortgage each year from their income, in return reducing their tax bill at the end of the year.

Every payment you make on your home mortgage reduces the amount of interest you pay and increases the amount of principal you pay. So each year the deduction gets a little smaller but it’s still WELL worth the deduction. According to the IRS all interest you pay toward your home is tax deductible up to 1 million dollars.

You also get to deduct any points you pay toward closing of a home loan. Sometimes home buyers pay a fee at closing called points. This is basically paying a percentage of the home loan up front in order to get a lower interest rate. These fees are fully tax deductable when you file your taxes. You may also include points paid toward a refinance and home equity loans.

If you are thinking about buying a home now is a great time to invest. Interest rates are very low and the values of homes have greatly decreased. You will also enjoy a great tax break from the government over the life of your loan.