Important Tax Tips for the Home Buyer for 2010
First Time Homeowner Tax Credit
The Internal Revenue Service (IRS) extended the first time homeowner tax credit to September of 2010. This tax tip for the home buyer in 2010 means that if you purchased a home (binding contract) by April 30th of 2010, you can claim the $8,000 credit.
The American Recovery & Reinvestment Act also recognized the need for 2008 first time home buyers to be able to claim a tax credit and via the new rule set forth via the Worker, Homeowner, and Business Assistance Act, if you purchased a home in 2008 ($7,500) or 2009 ($8,000), you can still file an amended return by using IRS form 5405 and submitting it with your amended 1040X form to the IRS.
To qualify for the 2010 tax credit, even though the binding contract must be signed by April 30th of 2010, the closing must be on or before September 30, 2010.
Other 2010 Tax Tips for the Home Buyer & Owner
Along with being a first time homeowner, there are other tax tips for 2010 that you should be aware of including:
- Mortgage Interest – Your lender sends you an annual statement of the amount of interest you paid annually on your mortgage. The entire amount of this interest may be utilized as a deduction. Don’t forget second mortgages or lines of credit—the interest paid on these are also deductible.
- Property Taxes – You should also deduct the property taxes you paid in any given year so make sure to keep your property tax statements on hand at tax time.
- Mortgage Points – If you paid for points when you obtained your mortgage to lower your interest rate, any amounts paid are also fully tax deductible.
- Improvements – Certain deductions may be made for improvements to your property such as energy efficient appliances, solar panels, other green or eco-friendly improvements, and even windows. You can ask your tax prepare to help you determine what is considered a deduction and most home tax preparation software includes help on determining home improvement tax credits. You can also take a look at IRS Form 5695 to determine if you qualify for energy credits and home improvements.
- Medical Expenses – IRS Publication 502 outlines the amount of medical and dental expenses you may deduct. If your medical expenses are at least 7.5% of your AGI (adjusted gross income on line 38 of your 1040), you can itemize these deductions for yourself, spouse and dependents. There are some restrictions so make sure you take a look at the IRS link to publication 502 provided above to determine if you qualify for this tax benefit.
- State Programs – Check your tax preparation software for updates to determine if the state where you reside offers any tax tips for homeowners in 2010. You can also ask your tax preparer as these vary from state to state and you may qualify for one or more state programs.
Beyond these tax tips for homeowners for 2010, you should make an online visit to the IRS and search for other tax breaks including childcare, caring for the elderly and more deductions or expenses you may be able to itemize. The IRS Tax Topic: Itemized Deductions offers quick answers and calculators to help you determine if you can itemize certain expenses and which ones are allowable.
Internal Revenue Service (https://www.irs.gov)
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