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[return to Real Estate Tips]
Buying Your Home
How to Buy
Property
Taxes
- How do property taxes work?
- Are property taxes deductible?
- Where can I learn more about appealing my
property taxes?
- How is a home's value determined?
- Are taxes on second homes deductible?
- What is an impound account?
- Do all loans require impound accounts?
- How are capital gains figured on a
rental?
- How do property taxes work?
Property taxes are what most homeowners in the United States pay for the
privilege of owning a piece of real estate, on average 1.5 percent of the property's
current market value. These annual local assessments by county or local authorities help
pay for public services and are calculated using a variety of formulas.
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- Are property taxes
deductible?
Property taxes on all real estate,
including those levied by state and local governments and school districts, are fully
deductible against current income taxes.
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- Where can I learn more
about appealing my property taxes?
Contact your
local tax assessor's office to see what procedures to follow to appeal your property tax
assessment. You may be able to appeal your assessment informally. Mostly likely, however,
you will have to go through a formal tax-appeal processes, which begin with an appeal
filed with the appropriate assessment appeals board.
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- How is a home's value
determined?
You have several ways to determine the
value of a home.
An appraisal is a professional estimate of a property's
market value, based on recent sales of comparable properties, location, square footage and
construction quality. This service varies in cost depending on the price of the home. On
average, an appraisal costs about $300 for a $250,000 house.
A comparative market analysis is an informal estimate of
market value performed by a real estate agent based on similar sales and property
attributes. Most agents offer free analyses in the hopes of winning your business.
You also can get a comparable sales report for a fee from
private companies that specialize in real estate data. You also can find comparable sales
information available on various real estate Internet sites.
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- Are taxes on second
homes deductible?
Interest and property taxes are
deductible on a second home if you itemize. Check with your accountant or tax adviser for
specifics.
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- What is an impound
account?
An impound account is a trust account
established by the lender to hold money to pay for real estate taxes, and mortgage and
homeowners insurance premiums as they are received each month.
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- Do all loans require
impound accounts?
If you are taking out a FHA or
VA loan, the lender can require an impound account to pay real estate taxes and hazard
insurance premiums, as with a standard loan. Most conventional loans do not require an
impound account.
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- How are capital gains
figured on a rental?
Different tax rules apply to
income properties and a primary residence. Pamela MacLean, spokeswoman for the Internal
Revenue Service in Oakland, Calif., office, says, "If people have rented out a
property that was once their primary residence, they have converted that property to a
rental or business property. "If they are taking the tax benefits of a business
property, like depreciation, which you cannot do on a personal home, you must back up and
take special steps if you want the benefit of capital gains rollover. That is a benefit
reserved for personal residence," MacLean says.
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© 2008 Century 21 Real Estate LLC. CENTURY 21 © is a registered trademark licensed to Century 21 Real Estate LLC. Equal Housing Opportunity. Each Office is Independently Owned and Operated.
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Century 21 Teramana-Westling, Inc.
4120 Sunset Blvd.
Steubenville, OH
740-264-0300 |
All materials © CENTURY 21 Teramana-Westling, Inc.
Last modified Saturday, June 14, 2008 |
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