Evansville Real Estate

9 Easy Mistakes Homeowners Make on Their Taxes

Don’t rouse the IRS or pay more taxes than necessary — know the score on each home tax deduction and credit.

As you calculate your tax returns, be careful not to commit any of these nine home-related tax mistakes, which tax pros say are especially common and can cost you money or draw the IRS to your doorstep.

Sin #1: Deducting the wrong year for property taxes

You take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them. Some taxing authorities work a year behind — that is, you’re not billed for 2013 property taxes until 2014. But that’s irrelevant to the feds. 

Enter on your federal forms whatever amount you actually paid in that tax year, no matter what the date is on your tax bill. Dave Hampton, CPA, a tax department manager at the Cincinnati accounting firm of Burke & Schindler, has seen homeowners confuse payments for different years and claim the incorrect amount.

Sin #2: Confusing escrow amount for actual taxes paid

If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed. The regular amount you pay into your escrow account each month to cover property taxes is probably a little more or a little less than your property tax bill. Your lender will adjust the amount every year or so to realign the two.

For example, your tax bill might be $1,200, but your lender may have collected $1,100 or $1,300 in escrow over the year. Deduct only $1,200 or the...

Tips To Save Energy And Add Value

1. Begin with a Right-Sized Home.

If the home you buy is simply too large for you or your family’s needs or plans, you stand a good chance of wasting energy through excessive heating and cooling costs. If it’s too small, you’ll feel cramped and uncomfortable. It’s a big investment, so seek balance and buy it “right” from the outset. 

2. Purchase Energy Star Appliances Such as Your TV, Dishwasher, Washer and Dryer, and Microwave.

And especially the refrigerator, as it alone contributes about 10 percent of the energy use in a home. Also, unplug electronics not in use or turn off power strips to avoid phantom charges. 

3. Install Efficient Lighting Such as Compact Fluorescent (CLF) or LED Bulbs in Every Fixture.

Lighting accounts for about 6 percent of an energy bill each year.

4. Get an Energy Audit and Have Tests Performed to Identify Ways of Improving Your Efficiency.

You can always upgrade your heating, ventilation, and air conditioning (HVAC) system as well as your thermal envelope, which includes insulation, windows, and doors  and the seals or weather stripping around them. Visit energy.gov/energytips for more tips.

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