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Avoid real estate tax mistakes that could cost you big.

Taxes are a part of life.  However, if you prepare properly you can avoid the pitfalls that create the most anxiety and/or hurt your bank account.  When it comes to real estate taxes, there can be mistakes that run your expenses up or draw the IRS to your doorstep.

Here are the common real estate tax mistakes – and how to avoid them!

Mistake No. 1: Miscalculations
The most common error on tax returns is bad math. Errors in arithmetic, or in transferring figures from one schedule to another, will get you an immediate correction notice. In miscalculation, you may end up with a smaller tax refund or owe more than you thought. Using a tax software program to file your return can help reduce mathematical errors.  Or, even better, hire a professional!  I have a great referral if you need one.

Mistake No. 2: Confusing amounts
It’s common for the escrow amount to get confused with the actual taxes paid. If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed. Contact the agency that collects your property tax to find out how much you paid.

Mistake No. 3: Deducting the wrong year for property taxes
You take a tax deduction for property taxes in the year you paid them. Even though some taxing authorities work a year behind, it’s essential to list the right amounts for the filing year.

Mistake No. 4: Failing to track capital gains
If you sold your primary residence last year, don’t forget to pay capital gains taxes on any profit!

Mistake No. 5: Filing incorrectly for energy tax credits
If you made any eligible improvements to your home, such as installing energy-efficient heating and cooling systems, you may be able to take a certain percentage tax credit. Keep in mind that this is a lifetime credit. If you claimed the credit in any recent years, you won’t be able to claim it again.

Do you want to make the most of your real estate? Hire a professional to help locate the right home for you; contact Jenn Blake Real Estate Group at Pacific Sotheby’s International Realty in San Diego, California at 858-663-6788.