Some ways to cut your tax bill with a home

The government has given homeowners, and potential homeowners some ways to save on their taxes this year.  Here are just a few of them:

Buy a new home

If you are a first-time home buyer you are eligible for up to an $8,000 tax credit when you file your taxes for 2009.  This credit only has to be paid-back to the government if you sell your home within 3 years of buying it.

P.S. If you haven’t owned a home in the past 36 months you are a considered a “first-time home buyer”.

Even if you are not a first-time home buyer, but are buying a new home this year, you can write-off any points you pay to a broker or to buy-down your interest rate.*

Refinance

Again, you can write-off any points you pay to a broker or to buy-down your interest rate while enjoying a lower payment through current low interest rates (the lowest they’ve been since World War II).*

Home Improvements

The government is offering tax breaks for sprucing-up your home.  Congress issued a credit up to 30% of the cost of installing a geothermal heat pump system in your home.  Also, the purchase and installation of a solar water system is eligible for a 30% tax credit.

Homeowners buying foam sealants, caulk and weather stripping are eligible for up to $1,500 in credits for improving the energy efficiency of their home.

Install fuel cells in your home and the government will kick you back 30% of your costs up to $1,500 per 0.5 kilowatts of power capacity.  The more power you produce, the more you get back.

Add new, energy efficient window and doors to your home.  The government will cover 30% of purchase and installation costs up to $5,000 for windows, doors and roofs that improve energy efficiency.

Looking beyond the obvious mortgage interest write-off could save you lots of money come next April.

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  1. #1 by rachael on April 14, 2009 - 9:28 am

    Thank you for the helpful information. I bookmarked your site, and I hope you keep up the good work on making your blog a success!

  2. #2 by greenhomesamerica on May 6, 2009 - 3:05 pm

    Good direction.

    Good advice.

    Note that the federal windows and doors credit caps at $1,500, and it is on materials only, NOT installation labor. For more detail on the home tax credits, see http://greenhomesamerica.wordpress.com/2009/05/05/1500-federal-tax-credit-clarification/

    Also on the home improvements, don’t automatically get sucked into the “window are the answer” line (you didn’t)–some windows contractors make wild savings claims that just aren’t acheiveable. The biggest bang for the buck is usually in the realm of insulation/air-sealing/duct-sealing. And heating and cooling equipment upgrades can be a much better deal than windows with the new credit. The best way to find out what makes the most sense for your home is with a good energy assessment. See http://greenhomesamerica.wordpress.com/2008/10/08/home-energy-audits/.

    Thanks,
    Mike

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