Take this quick list of tax tips to your personal tax guru and cash in your check from Uncle Sam!
1. 2009-10 First-time Homebuyer
Who It Helps: Recent (or current!) homebuyers who had not owned a home in the 3 years prior to buying, but bought one in 2009 or this year (must be in contract on or before April 30, 2010). Depending on when you bought (or buy! there’s still some time left!) income and purchase price limits may apply.
How It Helps: Depending on your income and purchase price, you can receive up to an $8,000 fully refundable tax credit. (That means if you were already getting a refund, you’ll get a bigger one!) You can claim the credit on your 2009 tax return (the one you file on April 15th), even if you bought in 2010.
IMPORTANT NOTE: Per the IRS website, “because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2009 tax return must file a paper — not electronic — return and attach Form 5405.”
2. 2009-10 Move-Up Buyer Tax Credit
Who It Helps: Current homeowners who have lived in the home they are selling, or have already sold, as their principal residence for five consecutive years of the last eight years who closed escrow between November 7, 2009 and July 1, 2010, so long as they are in contract on or before April 30, 2010.
How It Helps: Eligible homeowners can receive a tax credit of as much as $6,500, depending on income. You can claim the credit on your 2009 tax return (the one you file on April 15th), even if you bought in 2010.
Who It Helps: Short sellers, owners who lost homes through foreclosures or had their mortgage balance reduced through loan modifications.
How It Helps: Normally, when a loan is cancelled or forgiven through, for example, a short sale or foreclosure, the cancelled debt is transformed into taxable income – and the IRS comes looking for their cut. Under this Act, qualifying mortgage debt forgiven through foreclosure, short sale or loan modification is allowed to be excluded from taxable income. The forgiven mortgage debt must be a loan on your personal residence, and must be related to the purchase of your home (if you pulled a bunch of cash out and did a short sale on that mortgage, you might not qualify).
On top of these above-and-beyond tax credits, deductions and exemptions, longtime and brand-new homeowners should also look forward to claiming meaty tax deductions for basic closing costs (origination fees, taxes and points – oh my!), property taxes and mortgage interest deductions.
As always, talk to your tax preparer to see if you qualify for any of these tax perks. And don’t delay – the countdown to April 15th is on.