Everyday we here a reminder about the $8000 First time homebuyer credit but don’t overlook other tax benefits for owning/buying a home!!
Buying a home:
- $8000 Tax Credit – This is a true tax credit that can be taken by First time homebuyers as well as buyer’s that have not owned a home in the last 3 years. It applies to primary residences only, has income limitations and does not have to be paid back. You must close by November 30, 2009 in order to take the credit.
- Points – Points paid at closing are usually deductible as interest if you had enough down payment to cover the points.
- Private Mortgage Insurance premiums (PMI) – Buyer’s who put less than 20% down, usually pay PMI and PMI can usually be included in your interest deduction.
- Relocation/Moving Expenses – If you moved due to a job change you may be able to deduct the cost of moving. In order to take the deduction, you must move within one year of starting the new job, work full-time at least 39 weeks during the first 12 months at the new location, and your new job must be at least 50 miles further than the old residence was from the old job. Qualified moving expenses include your out-of-pocket cost of moving yourself, your family, and belongings to the new location.
Owning a home:
Once you purchase a home, you will most likely begin to itemize deductions on your tax return, if you are not already doing so:
- Mortgage Interest – This is usually your biggest deduction, you can also deduct interst on a home equity loan, provided it is secured to the property.
- Real Estate Taxes – Property taxes paid on your home, whether paid directly or paid through your mortgage company are deductible.
- Home Improvements and Energy Credits – The Recovery Act gives incentives to homeowners making improvements and energy-efficient upgrades to their homes. Taxpayers can get credits for 30% of the cost of qualifying doors, windows, HVAC, water heaters, roofing and insulation, up to a maximum credit of $1,500. Solar energy and wind energy systems are each 30% of cost with no maximum.
Selling a home:
Sellers don’t have to pay taxes on a profit up to $250,000 for single filers and $500,000 for joint filers. Homeowners must have lived in the home for at least two of the past five years to claim this exclusion.
Taxpayers whose homes were foreclosed may be able to exclude the mortgage debt that was forgiven in connection with the foreclosure. This provision applies to debt forgiven in calendar years 2007 through 2012, of up to $2 million is eligible for this exclusion ($1 million if married filing separately).
Always consult with your tax adviser before taking any deduction!!!
If you are considering buying or selling a home, we at the Marchant Team strive to always be ahead of the curve and provide you with the most innovative tools to assist you. Whether searching the Geist/Indianapolis area, Fishers area, Carmel area or Noblesville area, we have you covered. Some of the services we offer are “One Call Get’s it All” and “Smarter Agent“, feel free to give them a try, they will make your homebuying process a lot less stressful.