As the real estate crash destroys property values across the country, it’s easy to lose sight of one of the most appealing features of owning a home: tax savings. Uncle Sam has long used the tax code to promote home ownership. And although real estate prices are plummeting, those tax savings remain as lucrative as ever. While some of these benefits are well known–such as the mortgage interest deduction–others are less intuitive. At the same time, recently enacted legislation has introduced new opportunities for tax savings. Here are five easy-to-overlook, housing-related tax breaks you’ll want to remember this April 15th:
1. First-time home buyer tax credit: President Barack Obama’s $787 billion economic stimulus package–which became law in mid February–included a tax credit designed to ramp up housing demand. The new law offers eligible first-time home buyers a tax credit worth up to $8,000 when they purchase a principal residence on or after Jan. 1, 2009 and before Dec. 1, 2009. “It’s not a huge amount of money, but neither is it trivial,” says Mike Larson of Weiss Research. The credit does not have to be paid back, but it’s subject to income limitations. Under the terms of the legislation, a first-time home buyer is defined as anyone who has not had an ownership interest in a principal residence for three years before the transaction.
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