KANSAS CITY, MO, (MARKETWIRE via COMTEX) -- First-time homebuyers aren't the only ones to benefit from tax breaks. H&R Block urges homebuyers who are relocating for work or buying for other reasons to take advantage of incentives that can lower their tax bill. Plus, sellers should know how to report profits and losses to avoid a hefty tax bill.
"Now is a great time to buy or own a home," said Amy McAnarney, executive director of The Tax Institute at H&R Block. "There are great tax incentives for buying and owning a home, whether you're a first-time homebuyer or a repeat buyer. People selling their homes also need to know if they'll need to report the profit to the IRS."
Buying a home
Homebuyers can make the most of several tax breaks that help lower their tax bill based on the purchase of an existing or new home. For instance:
Owning a home
If a taxpayer typically has claimed the standard deduction, owning a home will likely mean itemizing for extra deductions. Some tax breaks for homeowners include:
Selling a home
Sellers won't have to pay taxes on a profit up to $250,000 for single filers and $500,000 for joint filers. Taxpayers must have lived in the home for at least two of the past five years to claim this exclusion. In some cases, taxpayers can claim a partial exclusion if they are selling due to a change in employment status, health reasons, divorce or other unforeseen circumstances.
Taxpayers whose homes were foreclosed may be able to exclude the mortgage debt that was forgiven in connection with the foreclosure. This provision applies to debt forgiven in calendar years 2007 through 2012, of up to $2 million is eligible for this exclusion ($1 million if married filing separately).
"Homeowners should maximize all the credits and deductions available. Knowing the tax incentives and how to take them is key for homeowners," McAnarney said.
The Tax Institute, a division of H&R Block, is a national leader in providing unbiased research, analysis and interpretation of federal and state tax laws. Staffed by enrolled agents, CPAs and attorneys, The Tax Institute provides industry expertise for matters related to taxes and the professional tax preparation industry.
H&R Block Inc. (NYSE: HRB) is the world's preeminent tax services provider, having prepared more than 500 million tax returns since 1955. In fiscal 2009, H&R Block had annual revenues of $4.1 billion and prepared more than 24 million tax returns worldwide, utilizing more than 120,000 highly trained tax professionals. The Company provides tax return preparation services in person, online through H&R Block Online, through its TaxCut(R) software and through other channels. The Company is also one of the leading providers of business services through RSM McGladrey.
SOURCE: H & R Block