| The US Internal Revenue Code is subject to | | | | currently own a home and has not for the past 3 |
| change by Congress every time they go into | | | | years may qualify for this credit. Currently, |
| session and it seems like they make changes | | | | property purchased from April 9, 2008 through |
| almost that often. There are certainly major | | | | July 1, 2009 is eligible for the credit provided all |
| changes slated for 2009 and after Obama is in | | | | requirements are met. There are several criteria |
| the Oval Office, we will likely have even more | | | | on this deal and you should consult with your tax |
| revisions. Some big items to note are the changes | | | | professional. The downside to this credit is that it |
| to section 179 covering assets, Bonus | | | | must be "recaptured" on future returns. The |
| Depreciation, the First Time Homebuyer Credit, | | | | reason why the First Time Homebuyer Credit is |
| and the increase in the Standard Deduction for | | | | not like other tax credits is that for 15 years |
| Real Property Taxes. | | | | after you take it, you will be required to increase |
| The Section 179 deduction has increased to | | | | your income tax by 1/15th of the amount of the |
| $250,000 for assets placed into service in 2008. | | | | credit taken until it is fully recaptured. It is still a |
| This will allow a business to expense out property | | | | great deal, an interest free loan; just not free |
| placed into service rather than depreciating it over | | | | money. |
| time. In addition, Bonus Depreciation is back. New | | | | Another goodie in the tax law changes is the |
| property with a MACRS class life of 20 years or | | | | ability to add a portion of your real estate taxes |
| less placed into service in 2008 gets a 50% | | | | to the standard deduction. This allows you to |
| bonus. A taxpayer may "elect out" of the bonus if | | | | benefit from claiming that expense without having |
| they choose. There are special rules for vehicles, | | | | to itemize on Schedule A. One might be better |
| but see your CPA or EA to determine if your | | | | off to go ahead and itemize as this "extra" is |
| business passenger vehicle, truck, minivan, or SUV | | | | limited to $1,000 for joint filers ($500 single). |
| qualifies. | | | | There were other changes to the law including a |
| The First Time Homebuyer Credit is also new for | | | | more favorable application of the "Kiddie Tax" for |
| 2008. This is more of an interest free loan from | | | | minors, benefits for volunteer firefighters and EMS |
| Uncle Sam via your 1040 than it is a credit. You | | | | workers, etc. For a comprehensive review of |
| get a bigger refund when you make a first time | | | | your personal situation and how the new laws |
| home purchase, but you pay it back over time | | | | may apply , see your tax professional. If you |
| from future tax returns. The refundable credit is | | | | want to "do it yourself", go ahead and fire up |
| equal to a whopping 10% of the purchase of a | | | | your PC. I don't recommend it though. Only two |
| qualifying principal residence. Unfortunately, the | | | | states license tax preparers (California and |
| maximum credit is limited to $7500. It is also | | | | Oregon). If you are not in one of those states, a |
| impacted by Adjusted Gross Income (AGI). Like | | | | good Certified Public Accountant (CPA) or Enrolled |
| many tax credits, it is reduced or eliminated for | | | | Agent (EA) can be well worth the fee. Other |
| higher income earners. | | | | respected credentials are the Accredited Tax |
| This "tax loophole" is designed to aid the real | | | | Preparer (ATP) or Accredited Tax Advisor (ATA). |
| estate industry. A taxpayer who does not | | | | |