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Wednesday, March 18, 2009

Guidance on New Tax Credits for Home Buying/Home Improvements

IR-2009-27:  First-Time Homebuyers Have Several Options to Maximize New Tax Credit:

As part of the Treasury Department’s consumer outreach effort and with the April 15 individual tax filing deadline approaching, the IRS today began a concerted effort to educate taxpayers about additional options at their disposal to claim the new $8,000 first-time homebuyer credit for 2009 home purchases. For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.

The Treasury Department encourages taxpayers to explore these options to maximize their credit and get their money back as fast as possible.

Wall Street Journal: Cracking a Valuable Homebuyer Credit:

Here are answers from IRS officials and tax advisers to some questions about the credit.

  • Who can claim the credit?
  • How much is the credit?
  • How do the income limits work?
  • What if I built a new home? How does that work?
  • I own more than one home. How do I figure out which is my "main" home? And does it have to be a house?
  • Are there any other qualifications?
  • Will the crdit help if I don't owe any tax?
  • What form do I use?
  • Where do I put the credit on my Form 1040?
  • I've already filed my return for 2008. Can I still claim it? If so, how?
  • If I buy this year, should I claim the new credit on my 2008 or 2009 tax return?

Wall Street Journal: How Your Home May Qualify for Bailout Cash; Energy-Efficient Upgrades Yield Valuable Tax Credits:

Potentially lucrative new and expanded tax incentives for energy-efficient and renewable-energy home improvements may offer some consolation to homeowners who feel they are falling between the cracks with the government's various economic stimulus efforts.

They include up to $1,500 in tax credits for adding qualifying windows, doors, insulation, roofs, heating and cooling equipment, water heaters and even wood and pellet stoves to your house in 2009 and 2010. Perks for installing pricier solar technology, small wind-energy systems or a geothermal-well system include a tax credit of 30% of qualifying expenditures with no upper limit through 2016. ...

Notably, these incentives are tax credits, which lower your tax bill dollar-for-dollar, versus a tax deduction, which trims money off taxable income. The IRS is expected to issue firm guidelines on details of the credits soon, and consumers should consult tax professionals for clarity on filing. ...

The credits fall into two primary camps. One is energy efficiency, which covers certain improvements to an existing home's structural elements, such as windows and insulation, as well as for the purchase of qualifying high-efficiency heating, cooling and water-heating equipment. The second is for renewable energy, which includes solar, wind, geothermal (heat generated from the earth) and fuel-cell technologies (which convert the chemical energy of a fuel, such as hydrogen, into electricity).

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Comments

does this work for everybody or only if you make less than $15,000 per year and are a minority with a disability who files on the 1040-EZ?

Posted by: Joe | Mar 19, 2009 11:33:26 AM

Would these credit effect the AMT ?

Posted by: REDSOX FAN | Mar 19, 2009 12:37:31 PM

That $8000 credit that "doesn't have to be paid back" (unlike the $7500 one for '08) comes with a huge asterisk. If you sell the home in the first three years, the entire $8000 is due the following year as an addition to taxes owed rather than over 15 years as the '08 credit is to be repaid. They aren't mentioning that part in most of the things I've read, but if people take the new credit and then have to/want to move, they're going to get burned.

Posted by: Watchman | Mar 19, 2009 2:06:00 PM

Does this pertain only to 'grounded' houses [eg. with land attached], or can this pertain as well to 'rolling homes' ?

Posted by: anonrobt | Mar 19, 2009 7:53:03 PM