Wednesday, February 24, 2016

Common North Shore Homeowner Tax Mistakes You Can Easily Avoid

Being a homeowner on Chicago's North Shore comes with its advantages, and among them are the tax benefits available. But that doesn't always mean they are easy to calculate! If you haven't already filed your tax return this year, there are a few key spots you'll want to pay close attention to, especially when it comes to your North Shore home.

Deducting the wrong year for property taxes
North Shore homeowners are able to deduct property taxes, but be sure it is in the year you actually paid them. While you may be taxed a year behind (for instance, being billed for your 2013 taxes in 2014), it's important that you pay attention to the tax year. Homeowners should only enter the amount they actually paid in that year.

Confusing escrow amount and actual taxes paid
Your lender may escrow funds to cover your property taxes in Winnetka, Deerfield, Northbrook, Glencoe, Highland Park or the surrounding areas, but that doesn't mean you should just deduct the amount escrowed. Your lender may collect just over or just under the amount of your property tax bill and will adjust every year to set it back on track, but it is important to deduct only the amount in taxes noted on the form your lender sends. For instance, if your property taxes are $2,500, but your lender collects $2,400 or $2,600, you would deduct the $2,500.

Forgetting to track home-related expenses
When tax time rolls around, you may realize you forgot to track all of your North Shore home-related expenses. Instead of scrambling, scan or file expenses, documents and receipts as you go so you are prepared for the following year.

Forgetting to track capital gains
If you sold your home for a profit last year, you will need to pay capital gains taxes. Typically, homeowners can exclude $250,000 of any profit from their taxes or $500,000 if married filing jointly. For instance, if you purchased your home for $200,000 and sold it for $500,000, your gains are $300,000. As a single filer, you would owe $50,000 of gains.

With February drawing to a close, the busy spring real estate season is just starting to heat up! Give me a call today to get started on your home search in Winnetka, Deerfield, Northbrook, Glencoe, Highland Park or the surrounding areas!

I'm here to help!

Janie Bress
Your North Shore Real Estate Expert

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