Tax Deductions to Squeeze In Before 2012

Pay real estate taxes
In some states, real estate taxes are billed once a year, with perhaps separate billings for municipal, county and school taxes. In others, inlcuding my home state of New Jersey, the taxes are combined but you are billed quarterly.

Make payments due early in 2012 before the end of December. In New Jersey, the first-quarter payment for the year is due Feb. 1, so I tell clients to send their check before Christmas.

Pay mortgage interest early
In most cases your monthly mortgage and/or home equity loan payments are due during the first week of the month. Make the January payment(s) before the end of the month and make sure the bank or mortgage company gets the payment in December so the additional interest payment will be reflected on your 2011 Form 1098.

Make your home more efficient
Have you taken steps to make your home green? If so, this credit is for you. The IRS considers qualified energy-efficiency improvements to be insulation, energy-efficient exterior windows and doors and certain roofs, though the cost of installing these items does not count and the deduction for windows is limited to $200. The credit also applies to the cost, including installation, of residential energy property such as high-efficiency heating and air conditioning systems.

If you haven't already claimed at least $500 in energy tax credits on prior years' tax returns, you can claim a credit of 10% of the cost of qualified energy-efficient purchases and improvements to your principal personal residence. The maximum credit is $500.

Also important: When buying, be sure to get a "Manufacturer's Certification" from the seller.

Make needed repairs to income properties
If you own rental real estate, such as a two-family home or vacation property, make needed repairs, buy supplies and make payments for the property this month and fill up the oil tank before year-end. You can also prepay real estate taxes, utility bills, insurance premiums and any January 2012 mortgage payment.