Tax Advantages of Home Ownership

The government extended an $8,000 credit for first time home buyers or anyone that has not owned a home in the last three years. You must sign a contract to purchase by April 30, 2010 and close by June 30, 2010.

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          In addition, the credit has been changed to additionally include anyone who has owned a home for five consecutive years out of the last eight years and is now buying a new home. These taxpayers may qualify for up to $6,500.00 credit on a new home if they sign a contract by May 1, 2010 and close by June 30, 2010. The credit reduces the first-time homebuyer's tax bill by the credit amount. You receive the credit even if you don't owe any taxes or if your tax bill is less than the credit amount.

          The credit is available for purchase of a principal residence costing $800,000 or less if purchased after November 6, 2009. Home buyers must be 18 years or older when they make the purchase. Documentation will be required to be sent in with your tax return and these tax returns do not qualify for e-filing, due to the documents that must be mailed in for proof of qualification for the credit.

          The income levels have changed, if you have modified adjusted gross income under $125,000 for single or under $225,000 for those who are married filing jointly. It does phase out for income over $145,000 single or $245,000 married. You will want to obtain the advice of your tax accountant to answer any questions you may have about your eligibility.

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