It’s not too late to have an impact on your tax bill in April. Tony Mathe, CPA/CFE at Nigl, Nigl, & Mathe, LLP in Oshkosh, says here are some great ways for homeowners to potentially lower their tax burden:
1) Get a home equity loan/line of credit to create tax-deductible interest. It’s the most wonderful time of the year -- to consolidate debt and use the equity in your home to lower your tax bill. With low rates – much lower than credit cards generally – you may be able to lower your overall payment AND will be able to deduct the interest paid on the loan. Consider using a home equity loan to finance energy-efficient improvements (#5 below) to maximize your tax benefits!
2) Prepay your January mortgage payment. If you can swing an early mortgage payment in December, you can deduct the interest from that payment on your 2011 taxes. Be sure to make your payment with enough time to be received and processed by your financial institution to be counted toward this year’s 1099 statement. Members who hold a mortgage with CitizensFirst and pay it through online banking can get their payments processed in one day, but a member paying via check or mail should leave a few extra days for payment delivery and processing. A safe bet would be to be sure your payment arrives and is processed no later than December 26.
3) Prepay your 2012 property taxes. The same theory applies here as above, where if you can swing an extra payment and want to receive the credit for 2011, prepay your property taxes for an extra bang for your buck when it comes time for your tax bill.
4) Donate to charity. ‘Tis the Season for giving, giving and more giving! Make donations to any of your favorite charities (non-profits) now during the Holiday Season and receive your gift of lower taxes in April! Don’t have any favorites? Here’s a list of ours. (Please note that charitable donations can only be deducted if you itemize your deductions).
5) Give your home the gift of energy-efficient improvements. There’s still time to take advantage of tax credits for installing Energy Star-rated doors, windows, roofs and heating/cooling equipment. The most generous tax credits are awarded for “green” improvements, like solar water heaters and geothermal heat pumps. Please note that there is a $500 lifetime limit on these credits, so if you have already taken advantage of tax credits from 2006-2010, you are not eligible for additional credits. See the Energy-Star website for information on available tax credits.
Example of tax credits available (from the Energy-Star website*):
| Roofing, insulation, | 10% of the cost, not including labor and installation, up to $500 |
| Furnaces/boilers (AFUE 95 or greater) | $150 |
| Central Air conditioning; gas, oil and propane water heaters; | $300 |
| Electric heat pump water heaters | $300 (Energy Factor of at least 2.0) |
| Solar water heaters | 30% of the cost, including labor and installation, with no upper limit |
| Geothermal heat pump | 30% of the cost including labor and installation, with no upper limit |
| Air Source heat pumps | $300 |
| Biomass stoves (corn, pellet- or wood-burning stoves) | $300 (not including cost of fuel) |
*See Energy-Star website for exact details on qualifications for tax credits, and as always, consult with a professional tax advisor to determine able tax credits before filing.
The information contained in this document should not be used in any actual transaction without the advice and guidance of a professional Tax Adviser who is familiar with all the relevant facts.
Although the information contained here is presented in good faith and believed to be correct, it is general in nature and is not intended as tax advice. Furthermore, the information contained herein may not be applicable to or suitable for the individuals' specific circumstances or needs and may require consideration of other matters.
