Property Tax Deduction Question

NebrJewelDecember 26, 2003

I need some help. Our property tax is not actually due until April 30. If I pay it by Dec 31, we can deduct it from our income tax. However, if I pay the taxes, then I can't pay some other bills and then I'll have to pay interest on those bills. Is there some kind of calculation I can use to figure out what would benefit me most - pay property tax or pay bills? Oh on another note, I am reasonably sure that our income this year will be higher than it will be next year.

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I assume that if you pay it prior to Dec 31 you can deduct it from this year's taxable income, and if you pay it next year, you'll deduct it next year.

So the difference is the possible savings in the year interim vs., ordinarily, the return that you could have got on the money.

In your case, however, less the costs involved in deferring paying the other bills in the meantime.

Adjusted for what different tax rate that you may have to pay on the highest taxed dollars of your taxable income, next year, if different from the rate this year.

Would it make more sense to borrow some at the bank to pay the other bills, if the difference in cost would be marked? If only minimal, probably not worth the bother - unless you want to build a solid credit history, lacking one at present. Though, if you're farming, I think that building a credit history will not be a concern!

Also - how long before you may be able to pay off the other bills (and what new unpaid bills may you have rung up in the meantime)?

Hope you are able to figure which is best.

Good wishes for the New Year.

joyful guy

    Bookmark   December 27, 2003 at 2:47PM
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