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Homeowners Can Save Thousands on 2009 Tax Returns

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Homeowners Can Save Thousands on 2009 Tax Returns

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June 15, 2011

Five words or less(NewsUSA) – The American Recovery and Reinvestment Act of 2009 is making homeownership and green improvements more affordable. It essentially puts more money in homeowners’ pockets.

The First-Time Homebuyer Credit is for qualifying individuals who purchase a home between December 31, 2008 and December 1, 2009. Those who have not owned a principal residence at any time during the three years prior to the date of purchase can receive a credit of 10 percent of the home purchase price, up to $8,000.

The credit phases out when modified adjusted gross income is $75,000 or $150,000 for joint filers. Married taxpayers must both qualify as first-time homebuyers in order to receive the full credit. The amount must be paid back only if the home ceases to be the owners’ principal residence within a period of 36 months that begins on the purchase date.

The credit was initially created to be claimed after a home is purchased, but qualified taxpayers can now use it beforehand. Homebuyers with mortgages backed by the Federal Housing Administration (FHA) could receive advanced credit that can be used for closing costs, fees and down payment beyond the FHA’s required 3.5 percent minimum. Although anyone can apply for an FHA-backed mortgage, there are limits on mortgage size, and lenders may charge a fee for advanced credit. Some states are offering similar programs.

The Act also includes a credit equal to 30 percent, up to $1,500, for certain home energy improvements. The Residential Energy Property Credit can be claimed on 2009 and 2010 returns for improvements such as adding insulation or installing energy efficient windows, doors, or heating and air conditioning systems. Bigger improvements involving alternative energy equipment, including solar hot water heaters, geothermal heat pumps and wind turbines may be claimed on 2009 to 2016 returns under the Residential Energy Efficient Property Credit.

In addition to homeowner provisions, the Act includes several new or increased tax breaks. Learn which ones you qualify for starting in October when TaxACT releases preview versions of its 2009 software. Doing so allows you to plan ahead and start your return early.

Learn details about the 2009 stimulus plan at www.IRS.gov, and visit TaxACT at www.TaxACT.com.

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