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Tax Time: 5 Things To Consider If You’re A Land Owner

tax time: 5 things to consider if you’re a land owner

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Published date:

March 16, 2018

Last updated date:

May 26, 2024

By Manny Manriquez

It’s Tax Time! But before you grumble and moan, be sure to consider these tips if you’re a land owner. You’ll thank us later… NOTE: The new laws called The Tax Cuts and Jobs Act did not go into effect until January 2018. The taxes you are doing now are applicable to the 2017 year. Everyone has the responsibility of paying their taxes. At the same time everyone has the right to take advantage of any potential tax breaks that may be available to them and as a land owner, there are a few state and federal obligations you’ll want to keep in mind. Here are a handful of tips to ensure you take advantage of all the benefits provided to land and property owners.

Tax Tip #1 - Exemptions & Deductions

When it comes to your property it is the State tax obligation that is going to be the most important to you. Your goal is to find out what expenses pertaining to your property, you can claim in your tax filing. For example in Texas if you own ranch land there may be several different expenses that you can use. Vehicles, conservation efforts, employee wages/benefits, tools, etc… all can be explored within your tax filing. The IRS has specific information and tips for farmers and ranchers, so take the time to review their info. If you are not working your ranch land you may still be entitled to some benefits. This will depend on the state that you live in. For example in Texas you might be able to use your land for a Wildlife tax exemption. This could help to reduce your property tax responsibilities. Also, if you’ve made ranch land your permanent residence and are not working the land, you may be entitled to the Homestead residence exemption. This will allow for a variety of different types of exemptions.

Tax Tip #2: Pre-Paid Taxes On Recent Purchases

If you just bought your property you may have paid for some of the taxes owed during the sale. Be sure to contact your real estate agent and tax professional because you may be able to claim the portion that you had reimbursed the seller for! When property is sold and bought there are many different types of disbursements that are made. Quite often sellers have paid their property taxes for the year. When a purchaser buys the property they are responsible for paying the share that applies to their new ownership of the property. This is the portion that can be claimed on the tax return.

Tax Tip #3: Mortgage Interest Deductions

If you borrowed money to buy your property then you likely have a mortgage. You may be able to claim a portion of the interest on this. It may also include the interest you are paying on a mortgage that you borrowed for a second property. For home loans up to one million you are able to claim the interest on this. However, this will be changing with the new tax reform. The new tax reform is reducing the amount of interest that can be claimed on a loan of one million to 750,000. But this new limit only applies to new mortgages taken out in 2017 and going forward.

Tax Tip #4 Personal Property Tax Deduction

You may be able to claim a personal property tax deduction from the Federal government, but there are certain requirements that you’ll have to follow. Every state has their own rules when it comes to the state property taxes. As such, they will each have their own mandates as to what qualifies as personal property. It ties in with the Federal portion of the taxes. Meaning that if a taxpayer has claimed itemized deduction on their Federal return they may be able to claim a deduction for all of the personal property taxes they are expected to pay. The personal property tax is different than the other types of taxes. Each state deals with them differently. Therefore, the taxpayer needs to familiarize themselves with the state rulings in which they are filing their property taxes for. In some states the personal property tax is applied to any type of property that is used to generate an income.

Tax Tip #5 Use The New Tax Laws To Your Advantage

Make yourself fully aware of the new Tax Cuts and Jobs Act. Actions that you take on your 2017 return could be affected by this. While how much you can save on your property taxes is not going to be the priority when you are buying property, it is always something that you should consider when making your property buying decision. If buying a piece of property is going to give you the added bonus of some tax savings then you are getting a good deal on your property. Plus, if you are buying property that could generate you some extra money then you have made an excellent real estate investment. Like this article? Please feel free to share or post a link on your site: 


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