Rate hits record 4.71%

The average interest rate for a 30-year mortgage dropped to a record low this week.

My Charleston County property tax bill arrived last week, and now I'm trying to decide when to pay it.

Like most South Carolina property owners, I receive my bill in the fall, but I can pay the taxes any time until mid-January without penalty.

The question of when to pay this year or next is one that could affect my federal taxes. Like many middle-income earners, I usually claim the standard deduction.

Property taxes can be an itemized deduction, but deductions reduce your taxes only if they exceed the standard deduction.

For people who are right on the edge -- with itemized deductions adding up to nearly as much as the standard -- there are strategies that can be used to your advantage, beginning with deciding when to pay property taxes.

Simply put, if you don't usually have enough deductions to make itemizing worthwhile in one year, you can shift a tax payment or other deductible expense into another year. That way, you can push two years' worth of certain deductibles into a single tax year.

For example, if I'm likely to itemize this year, I'll pay my property taxes before Dec. 31. But if I expect to itemize next year and claim the standard deduction this year, I'll change course.

To maximize deductions next year, I could pay this year's property tax bill in January and the 2012 bill next December. That way, I could count two years' worth of taxes as deductions in 2012.

Charitable contributions, which count as itemized deductions, also can be timed for the most

tax benefit.

Deciding when to pay a tax bill is easy if the bill is sent to you. If the bill is paid by a lender from an escrow account, check with your lender about paying the tax during a particular calendar year.

This sort of number-crunching can get pretty wonky, but taking the time to consider such things can put money in your pocket.

For many people, the big items when it comes to deductions are mortgage interest, state income tax, property taxes and charitable contributions. Add those things up, compare them to the standard deduction, and you'll have an idea whether to itemize.

Here are the federal standard deduction amounts for the 2011 tax year:

The amounts rise if the tax filer is 65 or older, or blind.

If you recently bought a home or refinanced a mortgage, here are other tax issues to keep in mind.

Usually, if you refinance a mortgage and you pay points -- points are a onetime up-front payment that trims the interest rate for the life of the loan -- you can deduct only a portion of those points each year over the life of the mortgage.

However, if you refinance again, with a new lender, you can claim the remaining value of the points you paid on the previous loan all at once, as an itemized deduction.

Also, if you paid mortgage insurance premiums this year on a home loan that closed after Dec. 31, 2006, the amount could be fully deductible, depending on your income. Most middle-income individuals and families can deduct the full amount.

Mortgage insurance, or PMI, usually applies to loans where the borrower made a down payment of less than 20 percent of the purchase price.

Reach David Slade at 937-5552, on Facebook or on Twitter at @DSladeNews.