Bankrate's 2009 Tax Guide
Capital gains
7 housing tax laws you don't want to miss

In 2009, those tax benefits are back. And the American Recovery and Reinvestment Act stimulus measure that became law in February expanded the dollar amount of these credits and made them available through 2010.

Tax credits in 2009 and 2010 for energy-efficient home improvements
Product categoryProduct type
WindowsExterior windows and skylights and storm windows
DoorsExterior doors and storm doors
RoofingMetal roofs, asphalt roofs
HVACCentral A/C
Air source heat pump
Gas, oil, propane furnace or hot water boiler
Advanced main air circulating fan
Water heatersGas, oil, propane water heater
Electric heat pump water heater

For each of these qualifying improvements made to your home between Feb. 17, 2009, the date the latest stimulus act became law, and Dec. 31, 2010, you can claim a tax credit of up to 30 percent of the product's cost. There is, however, a maximum credit cap of $1,500 per homeowner for all improvements combined.

For products purchased between Jan. 1 and Feb. 16, the available tax credits are less clear because the new legislation essentially overwrote the previous law reinstating the energy improvement. The IRS should clarify how these credits can be claimed later this year. In the meantime, hang onto to any receipts for all home energy improvement products purchased this year.

Improvements must meet or exceed specific energy-saving standards. Additional product and tax savings guidelines can be found at the U.S. government's Energy Star Web page.

For all tax years and all types of home energy improvements, you'll need to file IRS Form 5695 to claim your credits.

7. Second-home sale limits

In order to help pay for many of the new housing-related tax breaks, the tax law affecting second-home sales was changed beginning in 2009.

Thanks to a provision of the Housing and Economic Recovery Act of 2008, the U.S. Treasury now should make more money off second home sales. Previously, owners of multiple properties could move into one of their other homes, live there as their primary residence for two years and then sell the house and pocket any gains tax-free up to $250,000 if single, $500,000 for a home owned by a married couple who files a joint return.

Now, however, the time that the property was a second home or investment property must be taken into account. The owners now will owe tax on part of the sale money based on how long the house was used as a second, rather than their main, home.

As with the surviving spouse home sale exclusion change, the taxation of second home sale profit also is a permanent tax law change.

Of course, "permanent" doesn't always mean forever on Capitol Hill. Neither is there any guarantee that temporary tax breaks will be extended.

So keep an eye on all these home-related tax changes. If any can help you, be sure to take advantage of them while they still are on the books.


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