It’s time for that yearly financial gut-check that comes just before the April 15 tax return filing deadline. Relief this year comes in the form of housing tax credits that provide tax incentives to homeowners, first-time home buyers, and developers of low-income housing. The incentives include a one-year limited property tax deduction for homeowners who do not itemize their deductions; a temporary tax credit for eligible first-time home buyers; increased tax credits for developers of low-income rental housing; and expansion of the mortgage revenue bond program to help at-risk subprime borrowers refinance their homes.
The property tax deduction, for example, allows homeowners who pay property taxes, but who do not itemize their deductions, to get a one-time limited increase in the standard deduction on their 2008 taxes. This increases the standard deduction by $500 ($1,000 for married filing jointly), but not by more than the amount paid in state and local property taxes for the year.
Also available is a tax credit for first-time home buyers who close on their abodes on or after April 9, 2008, and before July 1, 2009. Worth 10 percent of the home’s purchase price, up to a maximum credit of $7,500 ($3,750 each for married filing separately), this tax credit is temporary and must be repaid in equal installments over 15 years.
If you purchase a house in 2009 after filing your 2008 taxes, you can file an amended 2008 tax return to claim the credit. The home buyer tax credit (www.federalhousing taxcredit.com/faq.php) is a refundable credit that can lower the amount of federal income taxes you owe or even result in a cash payment.
Go Green for Green
>> When President Bush signed the Economic Stimulus Act of 2008, he also increased limits on government-backed home loans. Later, he also signed into law the Emergency Economic Stabilization Act of 2008, which included an extension of the residential tax credits for energy-efficient improvements. The tax credit (of up to $500) is available for insulation, replacement windows, water heaters, and certain high-efficiency heating and cooling equipment installed in 2009.
Tax credits are also available for qualified solar-water heating and photovoltaic systems installed between 2006 and 2016. The tax credit is good for 30 percent of the cost of the system, up to $2,000. Additionally, there is a consumer tax credit of up to 30 percent of the cost (up to $500 per 0.5 kilowatt of capacity, maximum) for installing a “qualified” fuel cell and microturbine systems between 2006 and 2016. You can learn more about these tax credits for energy efficiency at www.energystar.gov .