{"id":1053,"date":"2022-02-22T19:36:07","date_gmt":"2022-02-22T19:36:07","guid":{"rendered":"https:\/\/taxreliefprofessional.com\/?p=1053"},"modified":"2023-09-25T20:36:13","modified_gmt":"2023-09-25T20:36:13","slug":"tax-tips-how-to-organize-your-property-tax-records","status":"publish","type":"post","link":"https:\/\/taxreliefprofessional.com\/filing-taxes\/tax-tips-how-to-organize-your-property-tax-records","title":{"rendered":"Tax Tips: How to Organize Your Property Tax Records"},"content":{"rendered":"\n

Tax season is here and the American people are starting to file. As of the first week of February, more than four million<\/a> Americans have filed their taxes.<\/p>\n\n\n\n

Over the past few years, there have been major changes to the federal tax code. New policies like the state and local tax (SALT) cap and advanced child tax credit (CTC) are impacting filers\u2019 bottom lines.<\/p>\n\n\n\n

In this article, we discuss how to organize your property tax records. Read on to see how business owners and high-income earners structure their tax records. Explore topics such as the federal solar tax credit and managing an investment property.<\/p>\n\n\n\n

Property Taxes<\/h2>\n\n\n\n

Homeowners pay various property taxes on their primary residence. Property taxes are paid to municipal and county governments to fund constituent services.<\/p>\n\n\n\n

At the beginning of a new year, your mortgage company sends Form 1098. This is a statement that captures how much mortgage interest you paid over the course of the year.<\/p>\n\n\n\n

Also on the form is a block for real estate taxes paid. You should retain the 1098 form as part of your tax records. Both mortgage interest and property taxes are deductible from a business or individual tax return.<\/p>\n\n\n\n

However, many tax filers receive a 1098 form with an empty block for real estate taxes. This block is only filled out if your mortgage company is responsible for paying property taxes. Many homeowners use an escrow account managed by their mortgage company to pay property taxes.<\/p>\n\n\n\n

Those with a 20% or more equity position in their home can opt-out of this service. These homeowners are responsible for making their own property tax payments.<\/p>\n\n\n\n

If this is the case, the document to retain comes from the local tax assessor. This form includes general information on your property and how much the net property taxes were for the year.<\/p>\n\n\n\n

SALT Cap<\/h2>\n\n\n\n

When the Trump administration reformed the tax code, they implemented a cap on SALT deductions. In the past, tax filers could deduct the entirety of the property taxes they paid each year.<\/p>\n\n\n\n

Instead, there is now a $10,000 cap<\/a> on SALT deductions. To make matters worse, this cap includes state income taxes as well.<\/p>\n\n\n\n

This is problematic for states with high taxes. Coastal states such as California and New York are significantly impacted by the SALT cap.<\/p>\n\n\n\n

For high and middle-class income earners, the $10,000 cap is easily reached. In New Jersey, for example, it is not uncommon for homeowners to pay more than $10,000 in property taxes alone.<\/p>\n\n\n\n

Home Office<\/h2>\n\n\n\n

You may be able to write off property tax expenses if you conduct business out of your home. There are many rules that dictate whether you can claim a home office or not.<\/p>\n\n\n\n

Generally, you cannot deduct property taxes for areas of the home that you combine for business and personal usage. If the area is exclusively used<\/a> for business purposes, you may be able to reduce your taxable income.<\/p>\n\n\n\n

As far as tax records go, you need to determine the percentage of home floor space used exclusively for the business. A home drawing or blueprint is one way that you can document the business footprint.<\/p>\n\n\n

\n
\n\n
\n
\n

\n Evaluate your tax situation\n <\/h2>\n

\n By evaluating your tax situation, you can identify areas where you may be able to reduce your tax burden and make informed decisions about your financial future.\n <\/p>\n \n \n\n\n

\n
\n
\n