Tuesday, February 3, 2009

Tax Shelter

Well it's that time of the year again. The fifth season that everyone dreads, tax season. We begin to gather up all the statements that we have received and some us even begin to dig up receipts and question what we can write-off. Are those Adidas I bought a write-off? I am sure everyone knows at least one person who thinks they can write off personal items. The only personal item, that I could think of, that can be used as a tax shelter is your home.

The home itself is not a tax write-off but the mortgage interest and property taxes associated with the home are tax write-offs. This tax season take the time to sit down with your tax preparer and ask how you can benefit from paying mortgage interest instead of rent. The low prices of homes now has made homes affordable once again and in some cases you can have a mortgage for less than what you pay for rent. This is a case by case basis so please do not write me to tell me that there is no way that you are going to move out of an apartment in West Los Angeles and find a home in the same area with a mortgage payment that is equivalent, of course not you have to find a home in another area. Do not get caught up in getting your taxes done and then focusing on how much you are getting back but focus on how much you paid total. So many times I hear someone tell me that they have a refund of $4000 coming to them and when I ask well how much did you pay total, they do not know. They could have had $20k deducted from their check and do not realize that they actually paid $16k in taxes. Also ask about the federal housing tax credit. You can also get more information at http://www.federalhousingtaxcredit.com/faq.php.

For those of you who have stuck it out in your homes and are looking for even more tax shelters, consider the tax credits that are available for making your home more energy efficient. You can visit http://www.energystar.gov/ for a list of these credits. During these tough economic times you can also take advantage of cheaper labor and more competitive pricing.

Remember if you do not have the kind of tax preparer that will talk to you then switch. There are plenty of CPA's and financial advisors that would be more than happy to sit and talk with you. Final note, these are just suggestions. I am not a CPA or licensed financial advisor. My real estate license does not make me a professional in those fields so please consult with a licensed professional. Feel free to call me if you need a referral cause that I can do and after years of networking I have a few good ones up my sleeve or on my pda.

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