While purchasing and maintaining a property is complicated enough, homeowners also have to consider the way in which real estate in Downtown San Diego can affect their taxes. Buyers gain a number of impressive tax benefits after the purchase of their property, however, they must additionally prepare for the added burden of yearly property taxes. Following are several important things to keep in mind as you get ready to deal with this side of ownership.
Property Taxes Are Determined by Multiple Factors
The value of your property will play the biggest role in determining this annual obligation. School districts, cities, townships, counties and other special districts can undergo changes in discretionary and non-discretionary spending, which can in turn alter the tax levy. These changes will impact your annual tax debt, irrespective of any constancy in your property’s value.
Special Assessments and Referendums
Special assessments for improvements pertaining to water lines, curbs, and other local infrastructure can also be factored into your tax bill. Additionally, there are some developments that are subject to referendums for government or school building projects that create significant property tax increases. Finally, state and federal mandates that require an increase in services provided at the city or county level can also affect your tax bill.
Personal Taxes
Each year, home ownership and the associated costs will open the door to a number of special tax deductions that limit your spending on personal taxes. This is especially true for the tax year in which you purchased a Downtown San Diego condo for sale. For instance, during this year, you can claim the points or origination fees on your loan, irrespective of whether these fees were paid by you or the person selling the property.
Mortgage Loan Interest
Interest on mortgage payments can be deducted from your personal tax obligations for every year of ownership. During the early years of ownership, the majority of your house payments will be allocated for mortgage loan interest, rather than being placed towards the principal balance. Thus, this deduction will be largest early on and will gradually decline as equity is accrued and the balance on your loan goes down. Most homeowners are able to deduct the full amount of their mortgage interest payments, up to $1 million.
Renovations
The impact that renovations have on property taxes can vary from city to city and county to county. It is important to note, however, that as value is added to your property, taxes will likely go up.
Deductions for Renovations and Remodeling Projects
There are, however, tax perks when renovating or remodeling. Make sure to save all receipts for labor and materials. These can be used at the time of a property sale to limit the likelihood of your incurring capital tax gains. More importantly, if your remodeling projects increase the energy-efficiency of your condo or loft, check out the websites for the city, county, and state to see whether any financial incentives or tax credits are available.
Thinking of purchasing a penthouse, loft, or condo in the Marina District, Little Italy, or East Village? We can help. Reach out today and let us help you find the place of your dreams. Call (619) 649-0368. ')}