If you are a first time buyer who bought your home this year, you can get 10% of the purchase price up to $8,000 as a credit. You can either amend this last year's return (8-12 weeks) or claim it on next year's taxes. The important thing to know hear is the definition of first time homebuyer may still include you even if you have owned a home before. Essentially, if you haven't owned a home (trailerhome, houseboat, cottage, house. Basically anything you live in and own) in the past 3 years, you are considered a first-time homebuyer and you qualify for this. You must then also live in the home for three years.
Considering the pricing and inventory in the market, now is the time to start looking. Also, you need to complete the sale by November 30, not the end of the year. This is a one-time deal that any apartment dweller should not pass up. One caveat, PAY ATTENTION to your documents at the closing. Don't be afraid to question the terms of the mortgage as to what you were promised. They will try to rush you to sign the mountain of documents but READ the mortgage. As with any deal, if you sit down to sign, you must be willing to get up and walk away if necessary. That is another reason to start the hunt now rather than wait until the deadline is hovering.
First-Time Homebuyer Credit:
For home purchases made after December 31, 2008, the new law raises the first-time homebuyer tax credit to $8,000 (from $7,500) and extends that credit to November 30, 2009. Any required repayments to IRS are eliminated after 36 months in the home. Phase-outs begin for individuals with AGI greater than $75,000 ($150,000 for MFJ) for the year of purchase. (Phase-outs apply for both 2008 and 2009.) A taxpayer who bought a home on or after April 9, 2008, and before January 1, 2009, will not qualify for the new homebuyer credit; the purchase will continue to be governed by the original 2008 first-time homebuyer credit.
Friday, June 12, 2009
Thursday, June 11, 2009
What is in it for the Car Buyer
I am going to be highlighting separate parts of the new tax breaks and who can use them. I recently got a call from a car salesman. Every car salesman needs to know this credit. The complete synopsis is at the end of this post. If you have any questions, please feel free to post a comment and I will respond as soon as I can.
Bottom line, if you are looking to head to one of these dealerships that is closing and closing its inventory, keep your receipt. IF you are buying a new car, you can deduct the sales tax. Unlike a lot of tax breaks, this is above the line. OK, so what does "above-the-line" mean and why is that good. Above the line simply refers to being above the line for "Adjusted Grose Income" which means you don't have to itemize to take it. As a tax payer, you have the choice to either add up all of your deductions (ie, itemize) or take the standard deduction (last year it was 5,250 for a person or 10,500 for a married couple). So if you get a $2,000 deduction that brings your total "itemized deductions" to $4,500, you obviously are better off with the standard and that $2,000 deduction is really worthless to you. By taking it above-the-line, you essentially deduct it before you get to the itemized or standard comparison. In other words, everyone actually gets it that isn't rich (Adjusted Gross Income too high, see below).
Temporary Tax Deduction on Car PurchasesPurchasers of new vehicles will get an above-the-line deduction for the state sales taxes, local sales taxes, and excise taxes paid. To qualify, a vehicle must be newly purchased for first use by the taxpayer and must (1) be a passenger vehicle, light truck, or motorcycle with a gross weight of no more than 8,500 pounds, or (2) be a motor home.Deductible taxes cannot exceed the portion attributable to the first $49,500 of the price paid for any single vehicle.Phase-outs start for individuals with AGI greater than $125,000 ($250,000 for MFJ).
Bottom line, if you are looking to head to one of these dealerships that is closing and closing its inventory, keep your receipt. IF you are buying a new car, you can deduct the sales tax. Unlike a lot of tax breaks, this is above the line. OK, so what does "above-the-line" mean and why is that good. Above the line simply refers to being above the line for "Adjusted Grose Income" which means you don't have to itemize to take it. As a tax payer, you have the choice to either add up all of your deductions (ie, itemize) or take the standard deduction (last year it was 5,250 for a person or 10,500 for a married couple). So if you get a $2,000 deduction that brings your total "itemized deductions" to $4,500, you obviously are better off with the standard and that $2,000 deduction is really worthless to you. By taking it above-the-line, you essentially deduct it before you get to the itemized or standard comparison. In other words, everyone actually gets it that isn't rich (Adjusted Gross Income too high, see below).
Temporary Tax Deduction on Car PurchasesPurchasers of new vehicles will get an above-the-line deduction for the state sales taxes, local sales taxes, and excise taxes paid. To qualify, a vehicle must be newly purchased for first use by the taxpayer and must (1) be a passenger vehicle, light truck, or motorcycle with a gross weight of no more than 8,500 pounds, or (2) be a motor home.Deductible taxes cannot exceed the portion attributable to the first $49,500 of the price paid for any single vehicle.Phase-outs start for individuals with AGI greater than $125,000 ($250,000 for MFJ).
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