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| Real Estate Blog |
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Tuesday, 26 January 2010
The following information is provided by NC Homeowners Alliance Winter/Spring 2010, Vol. 3 Issue 1
As tax season approaches, homeowners should be aware of tax credits that are available to them and for which they may qualify.
FIRST-TIME HOMEBUYER TAX CREDITS
First-time homebuyers and long-time homeowners may be able to claim a federal tax credit on a principal residence bought in 2009 or early 2010. Eligibility depends on several factors, including income, homeownership status and the exact purchase date.
A first-time homebuyer (defined as someone who hasn't owned a primary residence in the last three years) who purchases a home between Nov. 7, 2009, and April 30, 2010, may be eligible for a federal tax credit worth 10 percent of the sales price or $8,000, whichever is less.
If a buyer enters into a binding contract by April 30, 2010, the buyer has until June 30, 2010, to close on the purchase.
Qualifying purchases in 2009 can be claimed on your 2009 return or an amended 2008 return. Purchases in 2010 can be claimed on your 2009 or 2010 return.
First-time homebuyers who purchased a home between Jan. 1 and Nov. 6, 2009, may also be eligible for a federal tax credit worth up to $8,000. Tighter income limits apply to this credit.
CREDITS FOR "LONG TIME" HOMEOWNERS
"Long-time" homeowners - those people who have lived in their principal residence for five consecutive years out of the last eight - may also qualify for a homebuyer tax credit worth up to $6,500. To qualify, a buyer must purchase a principal residence between Nov. 7, 2009, and April 30, 2010. As with the first-time credit, a buyer can close as late as June 30, 2010, as long as there is a binding contract in place by April 30.
RESIDENTIAL ENERGY TAX CREDITS
Replace aging windows, HVAC systems and non-solar water heaters, install efficient biomass stoves, add insulation or fix a worn roof, and you might collect a tidy credit come tax time. To encourage greater energy efficiency, homeowners can recoup 30 percent of the cost, up to $1,500, for making any of these qualifying upgrades during 2009 or 2010. Claim the credit for the year when you complete the project.
The improvements must be made to your existing primary residence to be eligible. Homeowners can include the labor costs for HVAC, stove and water heater installations. Only the cost of materials counts for insulation, roofs and windows, exterior doors and skylights. Ask your contractor for a receipt that itemizes materials and labor. The IRS refers to the tax relief you can get for these projects as the Nonbusiness Energy Property Credit.
TAX DEDUCTIONS FOR VACATION HOMES
You may be eligible for a tax deduction for your vacation home. These deductions vary greatly, depending on how much you use the home and whether you rent it to others. And don't limit your definition of a vacation home to a beach cottage or a mountain cabin. Even recreational vehicles and boats can count, as long as they have sleeping, cooking and bathroom facilities. For more information about this tax credit and others mentioned in this article, visit www.irs.gov.
Source: www.houselogic.com
This article provides general information about tax credits and tax-related issues. It is not intended to provide tax or legal advice for specific transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction.
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