Clark County WA Real Estate Blog

If you have already filed your taxes before today, congratulations. If not, you’ll be burning the midnight oil tonight, and wondering why you waited so long. There is however, one silver lining in filing your taxes this year. Beginning in May, the IRS will begin issuing Tax Rebate Checks.

Specifically, the IRS will use your 2007 tax return to determine eligibility and calculate the basic amount of the payment. In most cases, the payment will be $600 for individuals  and $1,200 for taxpayers who file a joint return.  So go out and spend that Rebate Check. But make sure you get the most bang for the buck…
Of course, I have some suggestions:

• Pay off credit card debt and improve your credit score
• Go to your local bank and purchase a $1000 CD and spend the rest on something fun
• Buy some energy saving compact fluorescent lights and add insulation to your homes attic and crawl space.
• Replace some of your homes drafty single pane windows with energy efficient ones
• Replace your old wooden front door with an energy efficient foam core door

April 15th is fast approaching, and with it comes confusion for many homeowners. For example:

• Is mortgage interest and property taxes deductible on your personal taxes? Yes, the mortgage interest on a second home which you use as a residence for some portion of the taxable year, is generally deductible, as are Real Estate taxes. Deductible real estate taxes include any state and local taxes you paid.
• Is interest on a Home Equity Line of Credit Loan tax deductible? Yes, you may deduct home equity debt interest if you secure the debt with your home, and pay the interest in that tax year.
• Can I deduct points paid on a mortgage? Yes, you will need to divide the points by the number of payments over the term of the loan and deduct points for a year according to the number of payments made in the year.
• If you sell your primary residence, are you responsible for capital gains? Yes, when you sell your primary residence, you can make up to $250,000 in profit if you’re a single owner, or $500,000 if you’re married, and not owe any capital gains taxes. If the home you sold is a second residence, however, you may be responsible for capital gains.
• Can I deduct energy efficient home improvements I made during the year? Yes, you can, if the improvements improve energy efficiency, and you use products and improvements that follow International Energy Conservation Code, or IECC, standards. Typical improvements that qualify are attic fans, insulation, new windows, window film, exterior doors, energy efficient hot water heaters, and high efficiency airconditioners, heating systems, and heat pumps.

As you can see, there are many real estate related deductions you may use to reduce your overall tax rate. That should take the sting out of tax day, April 15th.