Tax Deductions

sargo · #1 (**permalink**) 09-28-2011, 05:38 PM

How much do tax deductions help? Specifically property taxes.
I am currently looking for a house within a few cities. The property taxes in the range i'm looking for can range from around $2000 a year to $7000. I've always heard that you can write your property taxes off, so i'm just wondering how much that really saves you. I know it all depends on income, withholding, etc, etc. But just looking for a "general" idea of how much that could mean, if possible. Or if paying a higher property tax is really that bad if it can be written off. Thanks.

disneysteve · #2 (**permalink**) 09-28-2011, 06:08 PM

Tax deductions are nice but always remember that just means you spend $1 to save $0.25 or thereabouts. It is never a good thing. You always come out behind in the deal.

dczech09 · #3 (**permalink**) 09-28-2011, 06:52 PM

A good thing to remember about tax deductions is that they are better than nothing. You should never base an economic decision on the tax consequences. While the tax consequences (or benefits) should be considered, they should not be the basis of your decision.

A tax deduction is when you pay $X to one person in order to not pay a PERCENTAGE of that amount to the government. All that you "save" is a percentage, not the whole thing.

Essentially deductions are simply the government's way of enticing us to do something, such as spend. Its all propaganda; financially smart people understand this.

mcfroggin · #4 (**permalink**) 10-08-2011, 08:25 AM

I would minimize your taxes as much as possible. Having higher property taxes does not help the bottom line.

dczech09 · #5 (**permalink**) 10-09-2011, 10:16 AM

Quote:

Originally Posted by mcfroggin

I would minimize your taxes as much as possible. Having higher property taxes does not help the bottom line.

Minimizing your taxes at the expense of paying someone else more money does not help the bottom line. For example, if you have the option of owning a house without a mortgage, then do it. It does not make sense to pay interest to a bank so that you do not have to pay a percentage to the government.

That being said, you should take the deduction if you are going to have the mortgage regardless. But this notion that one should keep a mortgage for the sole purpose of taking a tax deduction is extremely misguided.

Frugal · #6 (**permalink**) 10-09-2011, 01:45 PM

I agree that you have to spend a lot to get most deductions.

amarowsky · #7 (**permalink**) 10-12-2011, 05:27 PM

are expenses for your house (dry wall, paint, eletrical, plumbing work) able to be written off ?

Joan.of.the.Arch · #8 (**permalink**) 10-12-2011, 07:14 PM

Quote:

Originally Posted by amarowsky

are expenses for your house (dry wall, paint, eletrical, plumbing work) able to be written off ?

No, we do not get to reduce our federal taxes by taking care of our houses.

disneysteve · #9 (**permalink**) 10-13-2011, 05:25 AM

Quote:

Originally Posted by Joan.of.the.Arch

No, we do not get to reduce our federal taxes by taking care of our houses.

The exception to this is if you are making upgrades that qualify for deductions. For example, replacing windows, adding insulation, putting in a high efficiency furnace and other things like that might qualify for tax credits or deductions. Normal every day maintenance and cosmetic stuff (paint, carpets, etc.) do not count.

If you own a rental property, however, expenses that wouldn't count in your personal residence might count as business expenses.

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