The Bad Economy Silver Lining

Plan on buying a home in 2009: The current economic crisis has promoted Congress to add to the already favorable tax treatment given to buying homes in 2009.

Home buyers who haven’t owned a house as their principal residence in the past three years may qualify for a grant to help in the purchase of your new home. You can seek a tax rebate of up to $7,500 to help out. The provision applies to homes bought from April 9, 2008 through June 30, 2009, and phases out when adjusted gross income tops $150,000 on a joint return or $75,000 on a single one.

Although, there is no free lunch, Sorry: The money has to be repaid over 15 years, but with no interest. Maybe just a free snack.

Plan on Selling your home in 2009: I have been asked many times if you can deduct the loss of your home when you sell, the sad answer is, no. There is a great outstanding rule that is often forgotten by homeowners. Many Real Estate investors refer to this as the “Sweetheart Rule”, it is when you sell for a profit, you may obtain $500,000 of any joint gain (you and a spouse) and $250,000 if you are single, if you have lived in the home as a primary residence longer than 2 years.

Can’t sell your home, thought about renting it out: It may be wise to consult with a tax professional familiar with real estate before trying to rent out a home you can’t sell. The complexities of accounting for the rent and expense of your home can be difficult to manage and the tax implications of the sale can be very burdensome.

Hate paying property tax: For those who take a standard deduction rather than itemizing on their taxes for 2008. Congress voted to allow for 2008 and 2009 a special deduction for the property tax they pay. The deduction is for up to $1,000 on a joint return and $500 on a single one. It is in addition to the standard deduction. Every little bit helps, right.

Ready to retire and want to transfer your ownership: As we are all aware, asset values have diminished in 2008 and even though it is very difficult to bare, there may exist an opportunity. Estate planners say the factors of this economy make for a good time to transfer investments, a family business, or other assets to heirs. Interest rates are low for the transferee to assume the business and with low calculated values for a gift tax it allow for a optimal opportunity to make the move. If you acquire the business at a discount you will have the opportunity for future growth outside the benefactor's eventual estate and by so doing you diminish the estate tax.