Jackson Hewitt(R) Tax Franchise Provides Reminder to New and Long-Time Homeowners About Important, Money-Saving Tax Benefits
By: Jackson Hewitt Tax Service | 0 Shares 29 Reads
PARSIPPANY, N.J. // PRNewswire-FirstCall // -- Buying and owning a home is not only an important step in life, it's an area rich with benefits when it comes to filing an annual tax return. Jackson Hewitt Tax Service® reminds last-minute tax filers not to forget or overlook the many tax credits and deductions that relate to home ownership.
"From the special tax credit for first-time homebuyers, to the numerous tax incentives for making energy-efficient changes to a home, there are multiple reasons for taxpayers to speak with a tax preparer and ensure they take advantage of all home ownership-related credits and deductions for which they are eligible," said Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc.
Steber reminds homeowners to keep the following tax benefits top-of-mind as they gather their tax-related documents to have their tax return prepared in the coming days:
First Time Homebuyer Credit: This credit gives first-time home buyers the ability to claim a refundable credit of up to $8,000 ($4,000 if filing separately), provided that they are locked into a contract to close by midnight on April 30 and close on the home by midnight on June 30, 2010.
Long-time Homebuyer Credit: Taxpayers (and their spouses) who have lived in their home for five consecutive years out of the eight years preceding closing on a new house may qualify for a reduced credit of $6,500 ($3,250 if filing separately).
New Home Energy Credits: Taxpayers can receive a credit for making their homes more energy efficient by caulking doors and windows, adding new insulation to attics, buying an energy-efficient hot water heater or air conditioner and more. The credit amount is a total of 30% of the cost of qualifying improvements, up to $1,500, for tax year 2009 and 2010.
Tax Deductions and Buying a Home: Most of the expenses incurred when buying a home are not deductible. Yet there are certain closing costs (such as brokers' commissions, attorney's fees, recording fees, abstract fees, surveys, title searches, owner's title insurance policy and transfer taxes) that are added to the basis of your residence that are important to keep track of. When you sell, the basis is needed to calculate any gain or loss.
Real Estate Taxes: You may deduct real estate taxes in the year paid. They are generally reported on Form 1098 (Mortgage Interest Statement) or on your county real estate tax assessment statement. You should also deduct any prorated taxes collected from you at closing. These amounts are usually included on Form 1098, but you can get the total paid at your local tax assessor's office if they are not reported on your Form 1098.
Local Real Property Taxes and Assessments: Local taxes are deductible if they are charged uniformly against all property in the jurisdiction and if they are based on the assessed value of your home. Many states and counties also impose local benefit taxes for improvements to property, such as assessments for streets, sidewalks, and sewer lines. These taxes cannot be deducted but you can increase the cost basis of your property by the amount of the assessment.
Mortgage Interest: The amount of mortgage interest you paid on your principal residence (or second home) is deductible if you itemize deductions. This amount is generally shown on Form 1098 (Mortgage Interest Statement). You can also deduct the points paid to purchase your residence, even though some may have been paid by the seller. Mortgage insurance premium payments that are related to the purchase of your home are deductible annually.
In addition, Steber notes that taxpayers should keep records of the cost of improvements made that add value to the home, such as landscaping, patios, swimming pools, decks, room additions and roof replacements, as these items can be added to the cost basis. Repairs such as fixing leaks, repairing roofs and painting are not deductible and are not basis additions. The cost of your own labor is not deductible.
Jackson Hewitt tax preparers can help homeowners filing a 2009 tax return determine which credits and deductions they are entitled to, as well as answer a host of other filing-related questions.
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. (NYSE: JTX), with more than 6,300 franchised and company-owned offices throughout the United States, is an industry leader providing full service individual federal and state income tax return preparation. Most offices are independently owned and operated. The company is based in Parsippany, New Jersey.
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