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A collection of articles on deductions, credits and other tax benefits for homeowners.
November 5: A new law will extend the $8,000 homebuyer credit through April 30, 2010, and also change the rules for this credit.
Some of the changes take effect the day after President Obama signs the bill. Some people will save thousands of dollars if they can close before the new law takes effect, but others will save thousands if they do just the opposite.
details: Homebuyer Credit Critical Changes
Taxpayers who took out a mortgage for more than $1,000,000 in purchasing their homes may benefit from a new IRS interpretation of the law. Contrary to the approach taken by the Tax Court in two memorandum decisions, the IRS says the amount above $1,000,000 can be treated as home equity debt, potentially increasing by as much as $100,000 the amount of mortgage debt for which interest payments are allowed as a deduction. Taxpayers may wish to amend prior year returns to take advantage of this new interpretation.
This tax benefit offers the equivalent of an interest-free loan to certain people who bought homes in 2008, and an outright grant of up to $8,000 for qualifying purchases in 2009. We have a complete explanation of the rule here:
details: First-Time Homebuyer Credit
It's hard to believe you could have to report taxable income as a result of losing your home in a foreclosure, but that's a distinct possibility. Congress passed a law at the end of 2007 providing relief to most taxpayers in this situation.
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