Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Fools,

I asked a related question at the end of January; but at the time I was just trying to figure out how to deal with an overpayment of my property taxes due to a year-end refi.

My new question: Is there any way I can effectively double pay my property taxes in a given year and report it that way?

With the refi, I've ditched that irritating escrow account. I suspect this leaves me with new-found tax-saving opportunities. One such is double-paying my property taxes.

Interest expense is no longer significant. Without property taxes, I would not be able to itemize -- I may not be able to next year even so. Property taxes are huge in Texas. Mine are about ~2.5%/yr. At the moment that translates into about $3,250/yr.

One other interesting tidbit is that I can pay property taxes in the January following the year of assessment without penalty. If I pay taxes in January and December, I should be able to deduct $7,500 in property taxes in 2005, yes? Over any 2-yr period this should increase my deductions significantly.

Does anyone see anything wrong with this idea?

One more point: At the moment I file as Head of Household and my SD is $7K(?). In 2003, my interest expense was a bit below $6K. In 2004 my interest expense should fall to $3.3K. With only one year's property taxes my SD will exceed the combined interest and property taxes by almost $500. If I double up my tax payments in 2005, my 2005 taxable income should be reduced by about $2,500 while not affecting my 2004 taxes one bit.

- Joel
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.