“Pay property tax early for deduction” plus 1 more

Posted: 19 Dec 2010 03:55 AM PST

Published: Sunday, December 19, 2010 at 1:00 a.m.
Last Modified: Thursday, December 16, 2010 at 2:10 p.m.

Q:I received my property-tax bill a few weeks ago and already paid the first half installment of $1,432. But if I pay the second installment of $1,432 that's due in April this month, too, can I deduct the full amount ($2,864) on my next income-tax return?

A:Yes. The IRS allows you to deduct your property taxes on the return you file for the year in which you pay them. So, even though your second installment isn't due until the spring, you would be able to write off the entire $2,864 tax bill on your 2010 return if you pay the installment now.

The same rules apply to deductions for mortgage-interest payments.

These IRS rules allow many homeowners and rental-property investors who have been fortunate enough to make lots of money this year to reduce or delay paying income taxes on their earnings.

Let's say that you are one of the relatively few American homeowners who got a bonus from his or her employer this year. The bonus was $5,000, and you are in the common 25 percent federal income-tax bracket.

Because you have already paid the first half of the property taxes this year, you are entitled to a deduction that will trim $358 from your upcoming income-tax bill ($1,432 times .25 equals $358). But if you instead use part of that $5,000 bonus or other earnings to also pay your second installment now, you would double the savings on your 2010 return to $716 instead of having to split it between the return that you'll file next April and the 2011 return that you will complete the following year.

The same strategy works if you can afford to pay your January home-loan payment now. The mortgage-interest portion of next month's loan could be deducted on your upcoming return if you pay it immediately, rather than waiting for the savings to kick in when you file your 2011 tax return in the spring of 2012 -- nearly 15 months from now.

The IRS offers several free publications that explain the details. Call (800) 829-3676 for brochures or visit the agency's website, irs.gov. Also consult with an accountant or other tax expert.

If you decide that it would be wise financially to make next year's property-tax or mortgage payments now, you should get the check in the mail immediately or hand-deliver it to the local assessor's office or bank branch. If you don't, the assessor or lender might not be able to process the check until January, which means you won't get to take the deductions until you file your 2011 income-tax return in 2012.

Some tax collectors, such as Sarasota County's, allow you to pay online.

Our booklet "Straight Talk about Living Trusts" explains how even low- and middle-income homeowners can now reap the same benefits that creating an inexpensive trust once provided only to the wealthiest families. For a copy, send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960. Send questions to that same address and we'll try to respond in a future column. Cowles Syndicate Inc.

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Osseo adopts 2011 budget, property tax levy

Posted: 18 Dec 2010 11:24 PM PST

The Osseo City Council adopted its 2011 city budget and property tax levy during its Monday, Dec. 13, council meeting.

The council adopted the 2011 city budget and property tax levy.

City Administrator Jeffrey Dahl said the council and staff had been working on reviewing the budget since this summer. He said the only amendment from the Nov. 29 council work session was a deduction of the Economic Development Authority levy from $45,000 to $30,000.

Highlights of the 2011 General Budget include: the general operating budget is down 3.8 percent, or $77,164, from 2010 ($2,012,313 to $1,935,149), salaries are down 9 percent due to staff cuts and personnel changes, no cost of living increases (step increases remain), capital outlay (previously accounted through various equipment funds) increased 175 percent from $150,000 to $412,728 in 2011 and Local Government Aid (LGA) accounts for $798,902 or 41.3 percent of 2011 revenues.

The proposed 2011 Property Tax Levy is needed to support the general operating budget (general levy) and the previously approved special improvement projects (special levies). Highlights of the 2011 Property Tax Levy include: property tax levy are up 5.3 percent or $62,915 from 2010 ($1,186,244 to $1,249,159), the general fund levy accounts for 60.1 percent of the overall property tax levy, and 2011 should be the last property tax levy needed for the Central Avenue project.

The tax levy consists of $750,771 for the General Fund Levy, $117,929 for the G.O. Bond 2003C Levy, $108,200 for the G.O. Bond 2004A Levy, $71,362 G.O. Bond 2009A Levy and $200,897 G.O. CIP Bond 2010A Levy. This makes the tax levy total $1,249,159).

Resident's property taxes are proposed to go up 5.3 percent in 2011, most because of the addition of the special levy for the Central Avenue Improvement project and a recent capital improvement bond refinancing. The school district and county taxes are generally flat across the bound Dahl said.

Dahl said the city's budget is a balance of revenues and expenditures.

The cost of city services for a $200,000 home is about $903 annually.

Dahl added that the actual amount of LGA the city will receive is still unknown. He said the past three years the city has received an average of $50,000 less than what was originally indicated. If the same action was taken this year, Dahl said the city would receive $750,000 in LGA this year.

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Property Tax

Sunday, December 19, 2010