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Homeowners Reap Tax Benefits

  • As a homeowner you should know that there are number of tax benefits available for you. This is especially true for your 2009 returns because there are number of new bonuses.

    For example, if you purchase a home for $1 million or less, you can deduct the amount of interest you pay on your mortgage dollar-for-dollar. An interest is the biggest thing you have to pay for every month. Also, if you meet some requirements you may expect to have deduction of the private mortgage insurance (PMI).

    A tax credit available for the first-time buyers is up to $8,000 and existing homeowners who decide move up through April 30 can claim tax credit of up $ 6,500. You should consult your advisor to get more information about these credits.

    Energy-efficient home improvement tax credits

    Homeowners may qualify for a federal tax credit, if they make energy efficient upgrades to their houses. The tax credit consists of 30 percent of a product’s cost, up to a $1,500 maximum. The following types of equipment are eligible for a tax credit: energy efficient windows, insulation, doors, roofs, and heating and cooling equipment in existing homes. Improvements need to be installed from Jan. 1, 2009 to Dec.31, 2010 to take advantage of the credit.

    Improvements and appliances made on rental homes, second homes, or vacation property are not eligible for this tax credit. Energy-efficient products should be installed at taxpayer’s main residence.

    No taxes on phantom income

    If the person is unemployed, but he is struggling to make his mortgage payments, he is eligible for the Home Affordable Modification Program (HAMP). HAMP may lower the mortgage payments in order to make them more affordable and sustainable for the long-term. Moreover, if you are a part of the HAMP, you don’t have to pay taxes on what is a “phantom” taxable income. For example, if you owed $300,000 on your mortgage and through a loan modification the amount was reduced to $250,000, you ordinarily would be responsible for paying taxes on the $50,000. If you benefited with HAMP, however, that amount is not counted as taxable income under the general welfare exclusion.

    Despite the more traditional deductions, you are eligible to deduct some percentage of expenses from your taxes if you are working from home and using one of your room as your office.

    Please, make sure you understand what deductions you are eligible for. Hire a reputable tax advisor to get more information about the tax credits available for you.



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