- Nonbusiness Energy Property Credit- A tax credit of up to $1.500 for qualifying residential energy improvements (windows, doors etc)- can be claimed on your 2009 and 2010 tax returns
- Residential Energy Efficient Property Credit- An increased tax credit for larger residential energy efficient imporovements (solar heating, geothermal heat pumps etc)- can be claimed on your 2009-2016 tax returns.
I am also a tax professional- this is the information on the First Time Buyers Credit to date- like with all tax rules things change year to year.
Taxpayers who purchased a principal residence April 9, 2008 through June 30, 2009 who have not owned a principal residence in the previous three years may claim a refundable credit. The maximum credit is $7,500 and there are guidelines that reduce this amount when you do your taxes. There are no restrictions on what you can use the money on- it is added to your refund so you can use it for anything like repairs, remolding, or even paying off a couple of small bills or credit cards.
The credit, however, acts more like a no-interest loan because it must be repaid to the government over 15 years. It is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. If you qualify for the full $7,500 then you would repay $500 for 15 years out of your tax refund each year.
If more than one person owns the home and all qualify for first time home buyers the credit can be split between all persons involved if not married. If one person qualities for the first time home buyer and the other one does not (they owned a home within three years) the person who qualifies can still claim their part of the credit no matter if the other person could not.
The money can not be used as a down payment as the closing has to have taken place to claim the credit. It is not based on a credit score or job history it is only based on your income taxes in the year you are claiming the credit. It does not matter what type of home you buy- foreclosed or not- as long as it is considered real property.
This is not a mandatory credit and you can elect not to take it. If you are not planning to keep your home very long then this credit might be for you because if you sell with an outstanding credit still owed then this will need to be paid off in the year your home was sold. Also if you decide to rent out this home the credit will also become due in the year that is done. You need to ask yourself some questions before taking this credit and make the best choice that suits you.
The First-Time Homebuyer Credit can be claimed on Form 5405, which is filed with your 2008 or 2009 federal tax return.
Tax Preparation Checklist
- Social Security numbers including dependants
- Dependents date of birth
- Last years state and federal tax return
- Employer wage statements- Form W-2
- Self employment information- Form 1099 MISC
- Unemployment income- Form 1099-G
- Interest and dividend income
- Pension or retirement income
- Social Security Income
- Alimony paid or received
- Mortgage statements
- Real estate taxes paid
- Vechicle taxes paid
- IRA contributions
- Childcare expenses (must have provider’s ID number)
- Medical expenses
- Student loan interest
- Job-hunting expenses
- Job-related movind expensives
- Job- related expenses (uniforms, dues, tools)
- Casualty or theft losses
- Charitable donations
- Last year’s tax preparation fees
What Are Taxes?
In 1913 the 16th Amendment (an addition) to the U.S. Constitution was approved. This created the modern U.S. income tax system. Each year residents of the United States are required to file an income tax form based on their income during the year. One type of income is called wages. Most taxpayers are employees and earn a money in exchange for their work. Taxes are taken out of their pay check. At the end of the year they are sent a form stating how much they earned for the year and how much taxes were with held. Calculations on a tax form is done to see if the taxes with held during the year was enough or too much. If it was too much then you get a refund of the taxes you over paid or if you didn’t pay enough then you would owe the extra.
There are many factors used to calculate your taxes including credits, dependents, filing status, and deductions. Depending on the above factors the government has set up what is called a standard deduction that is taken off of the income you earned during the year and what is left is your taxable income.
Certain kinds of deductions are called itemized deductions. If you have enough of them to beat the standard deduction, it is usually a good idea to itemize. For most taxpayers, owning a home makes itemizing worthwhile. To deduct expenses of owning a home, you must file Form 1040 and itemize your deductions on Schedule A. There are three primary areas: real estate taxes, home mortgage interest, and mortgage insurance premiums. Generally, your real estate taxes, home mortgage interest, and mortgage insurance premiums are included in your house payment.
If you have investment property other items can be added to the above list. Advertising, utilities, repairs, maintenance, supplies, and professional fees. All of which can be used to make your deductions higher therefore lower your taxable income.
There are also credits which the government gives you a certain amount of money to take off your income before it is taxed. Energy credits are one of these. You can claim a credit for energy-saving home improvements made for the cost of skylights, outside doors, windows, pigmented roofs and high-efficiency furnaces, water heaters and central air conditioners installed this year in a primary home. This is usually not what you paid for the improvement but a standard deduction for what type of improvement. I look for other items to be added each tax year.