No one likes to talk about taxes. In fact, they’re usually mentioned in the same breath as death. But this time, the tax man might bring a few things that homeowners (or soon to be homeowners) will be excited to hear.
Ella Tkach, AKA, the tax lady (she’s a CPA), sent me a little sumptin sumptin that might just help you save a buck or two in 2009.
New Tax Credit for First-Time Homebuyers – For home purchases made after April 8, 2008 and before July 1, 2009, a first-time homebuyer (no present ownership interest in a principal residence in the U.S. during the 3-year period before purchasing the home) can receive a refundable tax credit equal to 10%
of the home’s purchase price but capped at $7,500 ($3,750 for married taxpayers filing separately).The credit is essentially an interest-free loan that must be paid back. The repayment will be in the form of an additional tax amount on the homeowner’s federal tax returns for 15 years. If the home is sold or no longer used as a primary residence before the end of the 15-year period, the balance of the credit that has not been repaid must be repaid in the year the home is sold or no longer the taxpayer’s primary residence. There are special rules for divorced taxpayers, deceased taxpayers, and where the credit that has not been repaid exceeds the gain when the home is sold. The credit is phased-out for high-income taxpayers and not allowed for nonresident alien homeowners or homes financed with tax-exempt mortgage bonds or property purchased from a related party.A New Twist for Home Sales – Taxpayers have been using a popular and legal tax strategy to exclude gain not just from their primary residence but also from rentals and second homes as well. This was accomplished by moving into the rental or second home and making it their primary residence for two years, then selling it and excluding the gain, up to $250,000 ($500,000 for joint filers). Beginning in 2009, Congress has muted this strategy by requiring proration of the home sale gain between periods of qualified home use (principal residence) and nonqualified use (rental or second home use), and allowing the home gain exclusion to apply only to gain from qualified periods. Good news is that periods of nonqualified use do not include any period:
â– Before January 1, 2009,
â– After the last date the property is used as the principal residence of the taxpayer or spouse (regardless of use during that period), and
â– Not to exceed two years that the taxpayer is temporarily absent by reason of a change in place of employment or health.
It goes without saying that these aren’t the only changes that are going to be happening to the tax code in 2009. If you’re good at keeping track of that sort of thing – then more power to you. But if you need a professional to guide you through the changes, feel free to contact Ella Tkach at [email protected] or email me and I’ll hook you up with her phone number.