Replacing windows or maybe even buying a home can bring federal tax credits
New Law Means $$$
By Randy Hallman
Willard and Suzanne Smith were helping their son, Ryan, move out of his off-campus apartment at Virginia Tech when they saw the sign. The town house next door was for sale.
Ryan is due back in Blacksburg for the fall semester to begin his second year of a four-year program to earn a Ph.D. The for-sale sign got the Smiths thinking. “He was paying $500 a month in rent,” says Suzanne Smith. “We just thought, hmm, maybe there’s a better way.”
Exploring the possibility, the Smiths found they were eligible for a first-time home buyer’s federal tax credit of $8,000. That, says Ryan, “made it a done deal for us.” Mom, 58, and Dad, 62, wouldn’t qualify as first-timers. They have their own place in Hardyville. But Ryan, 24, has never before owned a home.
The tax credit
The tax credit — 10 percent of a home’s value up to $8,000 — is part of the
American Recovery and Reinvestment Act of 2009, designed to pep up the housing market. The feds pay you the full $8,000 even if your total tax bill is less than that. If you’ve had $6,000 in taxes withheld, you can get it all back plus an extra $2,000.
Anybody who has not owned a house for three years is eligible, so if your circumstances have had you renting since 2006, you qualify.
There are T’s to be crossed and I’s to be dotted. For example, you can’t claim the credit if you’re buying the house from a close relative. You have to use the home as your primary residence. There are income limits: the tax-credit amount begins to phase out at $75,000 for individuals, $150,000 for married taxpayers.
Consult a professional who knows how the act works and what is required. Bailey Ashworth, owner of A & B Financial Services in Mechanicsville, says that for those who qualify, the credit is an excellent deal—just “make sure you meet all the conditions.” For more visit
www.federalhousingtaxcredit.com.
Energy credits for all homeowners
If you own your home and aren’t helping your kid buy one, there’s something else in the
Recovery and Reinvestment Act for you.
You can get a tax credit of up to $1,500 for energy-saving improvements such as windows, doors, heat-reflective roofing and skylights that meet federal standards. The credit is for 30 percent of up to $5,000 for the cost of materials. Installation labor is not included.
No matter how many improvements you make, $1,500 is the maximum you can claim as a tax credit for the rest of this year and the next. And this is for your primary residence—that Outer Banks cottage doesn’t qualify.
On the other hand, both your primary residence and the beach house qualify for credit for the installation of geothermal heat pumps, solar water heaters, solar panels, fuel cells and small wind-energy systems. And there’s no $1,500 cap. It’s 30 percent of the full cost, including installation.
The limit for the energy-efficient credit is your tax bill. You can get a credit equal to, but not exceeding, what you pay in taxes.
FOR MORE: Visit
www.energystar.gov, search “tax credits.”
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Randy Hallman is a former reporter and editor for the Richmond Times-Dispatch and the Richmond News Leader. He reported on sports and business.
