More info on tax
credits for home buyers AND homeowners!
The government's $787 billion economic stimulus package includes
several opportunities for individuals and families to lighten their
tax load. Of particular interest are the tax savings specifically
geared for home buyers and homeowners.
The new tax laws have specific limitations, so people need to pay
close attention. Of course, all tax-related actions and
decisions should be reviewed by a professional tax advisor.
So the following is meant to simply get the conversation
started.
1. $8,000 tax credit for first-time
home buyers. A first-time home buyer is anyone who has not
owned a home in the last three years. To qualify for the full $8,000
tax credit, couples filing jointly must earn less than $150,000 in
adjusted gross income for 2009. The home must be closed on by
November 30 of this year. THIS CREDIT COMPLETELY GOES AWAY ON
DECEMBER 1, 2009.
Now get this – anyone closing on a home before they file their
2008 tax returns can elect to take the credit on those 2008 taxes.
But they'll only get a $7,500 tax credit, even though they bought
their home in 2009. If they can wait to take the credit when they
file their 2009 tax return next year, they'll get the whole $8,000.
2. Green tax credits for homeowners. There is
now a $1,500 lifetime tax credit for home improvements such as
energy-efficient windows, doors, mechanical systems and insulation.
PLUS: Homeowners can now take a 30% tax credit for every dollar
they spend on green upgrades like solar heaters, heat pumps and fuel
cells. The credits apply through 2010.
These tax credits are a great help to sellers wanting to make
their homes more attractive.
3. Tax relief on short-sale and foreclosure
forgiveness. This benefits homeowners who
experience a short sale or foreclosure where the proceeds are less
than the amount owed on the mortgage. In the past, that forgiven
debt had to be treated as taxable income. But from now through 2012,
the forgiven debt will NOT be taxed as income. There is a limit of
up to $2 million of forgiven debt on the principal residence.
Taxpayers do not have to put the amount on their tax form, even if
they receive an IRS Form 1099 from the lender.
I would just like to add that the $8,000 tax credit could have
great positive impact on our industry. Its biggest demographic
appeal is to the under-30 Gen Y or Echo Boomers, who are almost as
numerous as their Baby Boomer parents. In addition, each first-time
buyer can cause up to three property sales in total, with no
addition to the inventory of homes for sale!
It's important to remind buyers and sellers that tax
credits are the best form of tax relief. They are a direct
dollar-for-dollar reduction of your tax liability – and for
first-time homebuyers, if the credit is larger than the tax
liability, they get a refund!