The Top 5 Tax Perks for Buyers, Sellers and Homeowners - 2009 Tax Edition
Trulia's In-house Consumer Advocate
tax time, but it doesn't have to be excruciating, especial
ly if you
bought, sold or owned a home in 2009. While so many of us think of tax
time as time to write a check, the Obama Administration's stimulus
package promised to reverse that tradition, effectively writing a check
(in tax credit format) to buyers, sellers and even short sellers and
those who lost a home through foreclosure.
Take this quick list
of tax tips to your personal tax guru and cash in your check from Uncle
1. 2009-10 First-time Homebuyer
- Who It Helps: Recent (or current!) homebuyers who
had not owned a home in the 3 years prior to buying, but bought one in
2009 or this year (must be in contract on or before April 30, 2010).
Depending on when you bought (or buy! there's still some time left!)
income and purchase price limits may apply.
- How It Helps:
Depending on your income and purchase price, you can receive up to an
$8,000 fully refundable tax credit. (That means if you were
already getting a refund, you'll get a bigger one!) You can claim the
credit on your 2009 tax return (the one you file on April 15th), even if
you bought in 2010.
- IMPORTANT NOTE: Per the IRS website, "because of the documentation requirements for claiming the credit,
taxpayers who claim the credit on their 2009 tax return must file a
paper — not electronic — return and attach Form 5405."
2. 2009-10 Move-Up Buyer Tax Credit
- Who It Helps:
Current homeowners who have lived in the home they are selling, or have
already sold, as their principal residence for five consecutive years of
the last eight years who closed escrow between November 7, 2009 and
July 1, 2010, so long as they are in contract on or before April 30,
- How It Helps: Eligible homeowners
can receive a tax credit of as much as $6,500, depending on income. You
can claim the credit on your 2009 tax return (the one you file on April
15th), even if you bought in 2010.
- IMPORTANT NOTE: Can't e-file to collect this one, either - see #1, above.
3. Energy Efficient Housing Tax Credits
It Helps: Homeowners who invested in making their homes more
energy-efficient in 2009 and 2010.
helps: Offers them a 30 percent tax credit on qualifying purchases of
energy-efficient furnaces, windows and insulation.
4. Private Mortgage Insurance Deduction
It Helps: Homeowners who bought a home in 2009, and put less than 20
percent down on their homes. These are the folks whose lenders required
them to pay for PMI, or private mortgage insurance.
It Helps: Allows them to deduct the costs - upfront and monthly - of
5. The Mortgage Forgiveness Debt Relief Act
It Helps: Short sellers, owners who lost homes through foreclosures or
had their mortgage balance reduced through loan modifications.
It Helps: Normally, when a loan is cancelled or forgiven through, for
example, a short sale or foreclosure, the cancelled debt is transformed
into taxable income - and the IRS comes looking for their cut. Under
this Act, qualifying mortgage debt forgiven through foreclosure, short
sale or loan modification is allowed to be excluded from taxable
income. The forgiven mortgage debt must be a loan on your personal
residence, and must be related to the purchase of your home (if you
pulled a bunch of cash out and did a short sale on that mortgage, you
might not qualify).
top of these above-and-beyond tax credits, deductions and exemptions,
longtime and brand-new homeowners should also look forward to claiming
meaty tax deductions for basic closing costs (origination fees, taxes
and points - oh my!), property taxes and mortgage interest deductions.
always, talk to your tax preparer to see if you qualify for any of
these tax perks. And don't delay - the countdown to April 15th is on.