Sunday, August 14, 2011

Deductions on Real Estate Tax - Know How

Tax! Yes sounds sometime horrible! Isn't it? But you don' have to worry about tax. There are may ways to cut your tax down. You better know how your tax can be deducted. Understanding Property Tax Deductions and how they apply to you. You should know what is taxable and what is non taxable. Below I have mentioned some criteria, methods by which you can get your tax beet cut.

The most important tax break for home-owners is probably real estate tax deductions, the deduction for state and local taxes, including real estate taxes. So it is a very important part of tax deduction.
Your property taxes are entirely deductible if they are imposed by the state, county, city, municipality, or other local government agency.

You can deduct real estate tax deductions for all your real estate - the deduction is not limited to only two principal residences, like the mortgage interest deduction at home. Real estate taxes paid by everyone who owns real estate for personal or family use is deductible.

Deductions for real estate taxes do not include charges for services, such as a fee per unit of water consumption or a periodic garbage removed. Taxes do not include assessments of local benefits that tend to increase the value of your property, as for the construction of streets, sidewalks or sewers. Any such charges must be added to the rateable value of your property - which eventually will reduce the amount of gain when you sell your property.

However, there is a distinction to be made between improvements and repairs. Assessments for repairs such as repairing a broken sidewalk, or for maintenance such as mowing, are deductible if the charges are divided separately on your tax bill.

Who gets tax deductions for real estate? The general rule is that the person who owns real estate and, therefore, should taxes is the person that you can deduct, on condition that he or she actually pays the amount. Co-owners must divide the tax bill and the deduction based on the percentage of ownership. If you pay taxes from another person on the property they own, which can not be deducted.

However, if you are divorced and his separation agreement or divorce requires you to pay real estate taxes property owned jointly by you and your ex-spouse, the amount you pay in part the ex-spouse may be deductible as alimony.

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