What If You Lose Your Property Tax Deduction?

Welcome back if you are joining us again, if this is your first visit, I’m glad you’re joining the real estate conversation.  I thought we would discuss taxes today as they pertain to real estate of course.  It has come to my attention that there are several places up north that are limiting the property tax deduction which we as homeowners benefit from on our annual tax returns.  This deduction is taken on Schedule A and it is paired with the mortgage interest deduction in most conversations about tax reform.  However, on the Schedule A itself, it falls into the Taxes You Paid category.  This will become important later in the conversation.  I’m going to attach an image of Schedule A as it appears today for demonstration purposes.

Schedule A image

 

My Credentials

Since many of you do not know this, I think it may be a good time to mention that prior to my work as a real estate agent, I owned a Liberty Tax Service franchise in Mount Pleasant, South Carolina.  I only say this because I want you to know that I am familiar with this topic and how it affects us as homeowners and taxpayers.

The Truth

Now then, back to the topic at hand.  In many counties, cities and townships up north, it is not uncommon for folks to pay exorbitant annual property taxes.  For the purpose of discussion only, I would consider anything over $5K per year exorbitant because I know that you could easily buy a million dollar property here and pay less than that all day long.   For the record, I’ve done the research on this and I can’t find one that exceeds $4K in property taxes per year on a waterfront, single-family home between $1M-$2M. Enough said.

More To Come

Here is how and why this tax reform is unfair and frankly, just plain unnerving to me.  It has crossed my mind on more than one occasion that with the limitations imposed on this particular deduction, it will open the door to a next generation tax deduction limitation on mortgage interest or worse, the elimination of Schedule A altogether.  Why?  Because it favors the government and not the individual obviously but, more than that, it eliminates the benefits of homeownership from a taxation standpoint.  Being that I’ve done thousands of tax returns myself over the years, I’ve seen first hand what happens when people lose the benefit of filing Schedule A. Through no fault of their own, I’ve seen taxpayers who were formerly homeowners that either sold their home or lost this tax deduction through divorce, instantly owe thousands of dollars to the government instead of receiving a refund.  It happens all of the time and it’s always a shock to the taxpayer.  You may feel as though I’ve digressed a bit but, I want to tell you that these are the types of things worth fighting for.  When and if you have the privilege to vote, use it.

I’m Inviting You

Back to the situation up north.  Those of you who have found yourselves in a losing position can still find hope.  I happen to live in one of the most beautiful and treasured cities in North America.  It is Charleston, South Carolina.  Feel free to Google us up if you’d like or you can read my blog posts about this wonderful place.  We are experiencing unprecedented growth and our economy is booming right now.  Let’s pretend for a moment that you decide to sell your home and move here.  What could you expect?  Well, we have pristine beaches, plenty of golf courses, abounding lakes and rivers, countryside and city landscapes as well.  Of course, we have excellent suburbs which will put you just a few short miles from any downtown venue you may want to partake of.     I guess what I’m trying to say is, please consider this a formal invitation to come visit or move to Charleston, South Carolina.  If you have a moment, check out my website.

www.letsmovetocharlestonsouthcarolina.com

 

It is connected directly to the Charleston Trident Multiple Listings Service (MLS) and there you’ll be able to see just how much your money can buy.  Your property tax deduction will not be limited and for some of you, the money you save in taxes could easily pay your mortgage for the year.  I’m serious about that.

Follow Me

For more information, check out my blog Steady As We Grow…

Or, if it tickles your fancy to make some money in real estate, now is the time and this is the place.  Check out Let’s Make Some Money In Real Estate

Call Me

In the meantime, if I can help you find the home of your dreams in the Lowcountry or just answer any questions that you may have, feel free to call, text or email me.  I look forward to hearing from you.

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