Pitch: You can benefit in unexpected ways if you know the tax codes that pertain to your property, as well as predict when the IRS might take a closer look based on how these codes affect what you own. Tax codes for vehicles, structures, even clean energy solutions for the home, can be a great revenue booster, but without the right knowledge, they can also be a huge hurdle. Find out which will help and what can hurt.
When it comes to property law, most of us are fumbling around in the dark, completely clueless. Some things we know, but most of it might as well be written in ancient Greek. And the only thing that can rival this knowledge gap is the addition of property tax codes. If trying to understand the legalese was giving you a headache, prepare to welcome a full-blown migraine if you are trying to decipher how the IRS can get involved.
There is some good news, though. Real estate attorneys are required to have tax codes in their toolkit so they can cover all the bases for their clients. They know what helps, what doesn’t, and how to keep the taxman at bay if something gets overlooked by the property owner. The excuse of “I didn’t know” doesn’t fly with the IRS, but, having a lawyer who can hold them off while everything gets sorted is invaluable.
Property tax is nothing more than a simple equation, the sum of which you as the homeowner must pay each year. Some mortgage companies factor your property taxes into your payments, but some leave that up to the owner, and because this is a yearly bill, it is often forgotten. This is when a property audit often occurs, and no one wants to see that letter in the mail.
How to calculate property tax is:
The Assessed Value of your home and land X the current tax rate
Your home may lose value with time, and the tax rate fluctuates from year to year, but in the end, the payment is pretty close to the same. The biggest changes happen when real estate values skyrocket. Your tax payment will reflect the inflation and you will have to shell out more for these fees than ever. That is why people are more inclined to sell their homes instead.
You might be thinking that property taxes are just another way for a greedy government to line its coffers. The truth is, while yes the money does go to local and state entities, it is more commonly used to repair roads, fix traffic signals, and build schools and parks. City services like libraries and community centers are largely funded by a mixture of property taxes and yearly income tax payments.
How The Codes Can Help
There are a few ways that tax codes for real estate can benefit you as a homeowner. For instance, if you are in a low-income bracket the code for your area can potentially give you a benefit that will lower your overall financial obligation. This varies from state to state and can even vary based on your city or county, so looking into it is a wise decision. Although it is likely your real estate attorney already has.
IF you are a veteran, a senior, or homesteading you can qualify for a tax exemption. This code takes all your tax obligations and throws them away, allowing you to retain more of your pension, social security payments, or even disability. The options for seniors and veterans are well defined and rarely contested in any court.
The last upside to property tax code law is the supplemental check-in. This only helps you if you paid less for the house than the previous owner. The difference can be enormous when it comes to property taxes as well as assessment of the home valuation. Buying when the market is slumping is tricky and most homeowners are waiting for the next crest, but some will unload their homes on the cheap to initiate a planned relocation. This is the time to pounce.
Before you try to muddle through the ins and outs of property tax codes and lose your will to go on, call a real estate attorney and ask them all the questions necessary to understand the information. They have this wealth of knowledge ready to go and can reply to any query with minimal thought. A lawyer who knows the answer before you ask the question is the lawyer you need in your corner.