Tax Tips for Home Buyers

Although fewer people are buying homes right now, for those who are on the market there are a number of tax breaks available. In fact, for those who have not had a primary residence in the last three years, there are considerable tax deductions available. Certain buyers in this category may be eligible to claim deductions of up to $ 8,000. For those who have recently purchased a home, there are still deductions available that can amount to nearly $ 6,500.

So forget about potential tax debt – for those in need of a new home, now might be the perfect time to look. By following these tips, you can find your perfect home and minimize the impact on your tax bill:

1. Moving expenses.The IRS has allowed tax deductions for moving expenses for people who have had to travel distances greater than 50 miles for a new job or to look for work. Unlike other types of deductions, you don’t need to itemize moving expenses. Therefore, it is possible to include different types of expenses, including the costs of relocating your favorite family pet.

2. Vacation properties.In certain circumstances, property taxes paid for vacation homes may be deducted. This tax deduction generally applies to those who buy their home as a group, or buy a timeshare, and who have property taxes listed separately on the owner’s bill due.

3. Houses bought from relatives.Unfortunately, properties purchased from family members do not qualify for the tax credit. The exclusion applies to ancestors, such as parents and grandparents, direct descendants, such as children and grandchildren, and spouses. However, homes purchased from aunts and uncles still qualify for the tax credit.

4. Previous owners.For individuals or families who have owned a home for five consecutive years out of the last eight, a $ 6,500 tax credit may be available. Eligibility depends on three things: your income, the purchase price of the home, and when the home was purchased. First, the home price must be less than $ 800,000. So for those who may have lower incomes or are concerned about buying a home when they already face large amounts of unpaid taxes, the option might still be worth considering. Contact a qualified tax attorney for more details.

5. Credit for homes with efficient use of energy.For those who build their own energy efficient residences, they may qualify for the Energy Efficient Homes Credit. Although the amount of the tax credit has decreased in the last year, it is still worth filing. The tax credit is available to those who own the land and materials that are used, even if a contractor is hired to manage the actual construction.

6. Presentation of returns on paper.For first time home buyers, it is imperative that they file a paper tax return. Electronic returns are not eligible for the tax credit.