Understanding Real Estate Taxes as a Marin County Homeowner

Welcome back to The Evergreen, Madrone Homes' one-stop resource for all things real estate in the scenic landscape of Marin County, California. Today, we're unpacking a common question that pops up when tax season rolls around, "Are real estate taxes deductible?"  As your local real estate experts, we're here to guide you through the sometimes complex labyrinth of tax deductions, particularly how they relate to homeownership. 

Your Deductible Property Taxes

Your home is much more than a beautiful sanctuary nestled in Marin County; it's also a significant financial investment. As such, it's only fitting to understand the tax implications associated with it. 

When it comes to property taxes, specific portions may be deductible from your federal taxes, including:

1. The annual property tax bill you receive from the Marin County Assessor
2. Supplemental property taxes paid upon purchasing a new home
3. Property taxes associated with any additional properties or land owned in Marin County

However, certain charges listed on your property tax bill such as utilities, trash collection fees, and taxes paid for home improvements are not deductible. 

How Does Real Estate Tax Deduction Work?

Deducting your real estate taxes isn't a one-size-fits-all approach. It largely hinges on whether you choose to itemize your deductions or opt for the standard deduction according to IRS regulations.

The process of itemizing involves summing up all your qualifying deductions, which can include property taxes, mortgage interest, charitable contributions, and more. If your total itemized deductions surpass the standard deduction amount for your filing status, then itemizing is the financially astute choice. 

It's essential to understand that the landscape of real estate tax deductions was altered by the Tax Cuts and Jobs Act of 2017. This act introduced two significant changes:

1. It instituted a cap on the total deduction for state and local taxes (which includes property taxes) at $10,000 for individual filers or married couples according to the Franchise Tax Board
2. It considerably increased the standard deduction amounts 

Therefore, it's crucial to evaluate your total itemized deductions against the standard deduction to ascertain which option maximizes your tax savings.

Tips for Marin County Homeowners Claiming Real Estate Tax Deductions

Are you ready to leverage your property ownership for tax benefits? If itemizing deductions seems to be a favorable option for your tax situation, here are a few tips to ensure you are on the right track:

1. Keep copies of your property tax bills from the Marin County Assessor's Office
2. Review your escrow statements for any property taxes paid via an impound account
3. Fill out Schedule A when filing your federal taxes
4. Consider prepaying next year's taxes if your total state and local taxes haven't reached the $10,000 cap

Common Deductions for Marin County Homeowners

Mortgage Interest Deduction - You can deduct the mortgage interest paid on loans used to buy, build or improve your primary residence and second homes. This deduction is also capped at $750,000 of loan value. Be sure to collect Form 1098 from your lender detailing mortgage interest paid.

Charitable Donations - If you made monetary donations to qualified charitable organizations, you can deduct these contributions if you itemize. Get receipts from the charities detailing your gifts.

Medical Expense Deduction - Your unreimbursed medical expenses exceeding 7.5% of your adjusted gross income are deductible, which can include home healthcare and modifications like ramps.

Casualty and Theft Losses - You may deduct losses from theft, vandalism, fire, earthquake, flood or other disasters if they were sudden, unexpected and outside your control. Keep documentation like repair estimates.

California Solar Tax Credit - CA offers up to $500 off your state income tax for installing an eligible solar system. File Form 3540 claiming the credit.

Seismic Safety Tax Credit - CA provides up to $3,000 off state income taxes for earthquake retrofitting on your existing home. File Form 3540.

Property Tax Postponement - Qualified CA residents 62+ can postpone property tax payments if household income is $51,762 or less. Taxes accumulate with interest.

At Madrone Homes, our team is committed to helping you maximize the financial benefits of homeownership. Remember, a better understanding of real estate taxes equals a smarter homeowner. 

Check out The Evergreen for more helpful insights into the Marin County real estate landscape. We're here to make your homeownership journey smoother and more financially rewarding. Happy house-owning, Marin!