Year-end tax tactics for homeowners include:
Make your January mortgage payment. You probably can pick up an extra month’s worth of mortgage interest deductions for 2001 by paying your January obligation in December. Mail the check as early as possible, to ensure that your mortgage lender includes the payment on Form 1098 for 2001. If the payment is included on this form, you won’t have a discrepancy to explain to the IRS.
Pay your outstanding property taxes. Again, you might gain extra write-offs by paying your property tax bill in December, even if the taxes aren’t due until early next year.
This strategy will work only if you normally send your property tax payments directly to the tax collector. If you normally include your property tax outlays with your mortgage payments, paying early won’t make the taxes deductible for 2001 because of the turnover delay. Paying property taxes (as well as state income taxes) in December also will be a waste if you’re subject to the “alternative minimum tax” (AMT) this year, so check first with your tax pro.