September 14th, 2011 
admin  |
No items matching your keywords were found.
2007 federal tax return address
|
No items matching your keywords were found.
| Account limit of 2140 requests per hour exceeded. |
Conversations With History - Jack Citrin
Taking the Pain Out of Home Ownership: Tax Breaks Enrolled Agents Need
Owning a home opens the door to a plethora of tax-saving opportunities, and there are a literally dozens of tax breaks that homeowners should leverage. So, too, should the enrolled agent as the registered tax return preparer working on their behalf.
The rule of thumb, as enrolled agents know from the EA examination and tax CPE, the enrolled agent continuing education courses required for ongoing certification, is that homeowners are required to file Form 1040, and any itemized deductions (including those specifically for homeowners) must be indicated on Schedule A. Even if a taxpayer itemizes, and cannot take the standard tax deduction, there still are several tax credits and exclusions that they are able to take whether or not they itemize.
Many homeowners are in the dark when it comes to this, and it is the responsibility of enrolled agents make these deductions known, along with the fact that they may also be able to amend previous years' returns if these deductions were previously unclaimed.
Below are several facts related to these potential tax savings for homeowners:
2010 Is the End of the Road
2010 marks the final tax-filing year where homeowners can benefit from a refundable first time homebuyers' credit of 10 % of the purchase price of a new home—up to $8,000. The credit is available for homes purchased before October 1, 2010 and where a binding agreement was signed before May 1, 2010.
Repeat Homebuyer Credit
A refundable "repeat homebuyers' credit" may also benefit taxpayers who bought and closed on a home between April 30th and October 1st. The credit is worth 10 % of the purchase price, and carries a limit of $6,500. Qualifying criteria stipulate that the taxpayer must have owned and lived in the home as a main residence for five straight years over the past eight. Plus the home cannot have exceeded the purchase price of $800,000.
Home Sale Profits
Homeowners are able to exclude up to $250,000 of gain on the sale of a home (the analogous sum for joint filers is $500,000) provided they have owned and lived in the home as their main residence for two out of the five years prior to the sale
Mortgage Interest
Homeowners are also permitted to deduct mortgage indebtedness of up to $1 million. The This deduction can be taken on both the principal residence and one other home.
Home Equity
Up to $100,000 in interest on a home equity loan can also be deducted, provided the loan was used to acquire, build or "substantially improve" a home.
Mortgage Points
Mortgage points on the purchase or improvement of a principal residence are deductible, provided they reflect customary practice in the area. However, points paid on a refinancing loan must be deducted over the term of the loan.
Insurance Premiums
Mortgage insurance premiums are also deducted as mortgage interest through 2010, provided the insurance was acquired on January 1st of 2007 or after.
Property Tax
Homeowners can also take state and local property taxes as an itemized deduction. It is important to note, however, that, unfortunately, the previous option of taking up to $500 ($1,000 for joint filers) as an additional standard deduction for real estate taxes expired at the end of 2009 and was not renewed for 2010.
Rentals
When taxpayer's residence is rented for less than 15 days a year, the rental income can be excluded from gross income. As a result, no deductions attributable to such rental are permitted.
Special Relief for Mortgage Debt
When mortgage debt of up to $2 million on a principal residence is forgiven (whether as a short-sale or foreclosure), it is not treated as "cancellation of debt income." This special relief is temporary and is available through the end of 2011.
Green Incentives
Homeowners who installed energy-efficient by December 31st of 2010 may be eligible to claim a 30 % tax credit worth as much as $1,500. The American Recovery and Reinvestment Act of 2009 extends energy tax credits to homeowners who have installed energy-efficient exterior windows and doors, furnaces, air conditioners and water pumps.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.
About the Author
Posted in 
Tags: 
