New law provides home tax breaks

The Housing Assistance Tax Act of 2008, part of the housing bill signed into law on July 28, includes two homeowner-targeted provisions that may benefit you - and one that could hurt. Here's a recap.

First-time homebuyer credit.

Purchase your first home on or after April 9, 2008, and before July 1, 2009, and you may be able to take advantage of a federal income tax credit of up to $7,500.

• You're considered a "first-time homebuyer" if you had no ownership interest in a principal residence in the U.S. during the three years before the purchase.
• The credit is refundable, so you could get money back if the amount you're eligible to claim is more than the tax you owe.
• The credit is reduced when modified adjusted gross income exceeds $75,000 if you're single and $150,000 if you're married filing jointly.
• A house you construct qualifies, but one you purchase from relatives generally does not.
• There's a recapture provision, meaning you'll have to pay the credit back in most cases. The payback period is spread over 15 years, beginning two years after you buy your home.

For 2008 you can deduct real property taxes even if you don't itemize.

• The break takes the form of an increased standard deduction.
• The amount of this one-time benefit is the lesser of property taxes you actually pay during the year or $500 ($1,000 for married filing jointly).

• The new rules, effective for sales after December 31, 2008, reduce the gain exclusion for "nonqualified use," such as use as a rental or as a vacation home.
• The amount of the reduction is based on periods of time after January 1, 2009, when the home is not the principal residence of you, your spouse, or former spouse. Some exceptions apply.

For more information or planning assistance, give us a call.

Ciuni & Panichi, Inc.
Certified Public Accountants & Business Consulting Firm


25201 Chagrin Boulevard
Cleveland, Ohio 44122

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