Real Estate Taxes

Prepaying property taxes and state income taxes can save you in the long run.

Pay state and local tax installments before December 31st. This will increase the deduction for state and local taxes on your 2014 Federal income tax return. California only counts payments made in the calendar year for 100% credit.

The prepayment usually makes sense if you expect to be in the same, or lower, tax bracket next year. Don’t prepay if you expect to be hit with the AMT, as state and local taxes are not deductible for AMT purposes.

Even if you use the IRS tax tables, you can add certain big ticket items to your sales tax table write off (cars, boats and planes). You can deduct all the actual sales tax you paid, not just the big ticket items, but you need receipts for both claims.

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