Every one of us makes mistakes and we try our best to learn from it. However, there are other aspects in which mistakes are very costly. We all know that every income earned is subject to taxes. Real Estate is a wealth building tool that can offer capital growth and tax deductions. Filing taxes is a complicated process and we are prone to making mistakes. We need to file our Taxes right or else we get to pay more in penalties.
Here are some common mistakes in Real Estate Taxes.
Deducting the wrong year for property taxes
Some tax authorities work a year behind and property taxes take effect in the year you bought the property. This can be confusing because if you bought a property in 2016, you pay for your 2016 taxes on 2017 and there is a very big possibility that you’ll think you have already paid for 2017. The best thing you can do is double check everything and consult with your local tax authority if you have any due on your taxes to avoid penalties.
Claiming non-valid expenses for deductible claims
Owning a home gives you tax breaks where everything you spend on renovations can be used as deductions. Make sure to keep all receipts related to your renovation expenses. However, not all claims are valid. Personal expenses cannot be included. If you’re constructing a separate room yourself to make way for another member of your family, you cannot claim for labor costs because you’re doing it yourself. You cannot produce a receipt for your services. You can only make a claim for the valid expenses like the cost of the construction materials used.
Not filing on time
We all have deadlines to meet at work that sometimes we totally forget the deadline for paying our Property taxes. We need to clear our minds and remember our other obligations. Failure to do so can mean penalties. You’ll have to pay more because you did not pay on time.
Failing to affix your signature even if you submitted or paid in time is just equal to missing a key requirement. In order for the local tax authority to validate your payment or filing, you need to affix your signature. It is the only way to distinguish that document you’re filing is valid.
A wrong spelling of your name or address can mean an entirely different individual that’s obviously not you. You need to double check everything before submitting any form to ensure that credit is given where its due. That means you have complied with all the requirements under your name.