Under previous law, when a spouse died, the surviving husband or wife could take advantage of the full $500,000 sale exclusion only if the home was sold in the same year the spouse died. If the sale took place after that year, the surviving husband or wife was entitled to only the $250,000 exclusion amount.
Now, however, a surviving spouse can exclude up to the full $500,000 as long as the sale occurs within two years of spouse's date of death. The surviving spouse still must meet the regular ownership and use requirements; that is, the widow or widower must have lived in the property as his or her primary residence for two of the five years before the sale.
There is no sunset date for this tax law. The surviving spouse home sale exclusion relief is permanent.
6. Energy-saving home improvementsTax breaks for making a home more energy efficient first appeared in the 2005 energy bill. In 2009, those tax benefits were expanded.
For qualifying improvements made to your home between Feb. 17, 2009 -- the date the latest stimulus act in which they were included became law -- and the end of this year, 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.
Taxpayers who take advantage of common energy upgrades, such as installing storm windows and doors, adding insulation and buying a new energy-efficient air conditioner or heat pump, should be able to take this $1,500 credit. Others who install more elaborate energy-saving options, such as fuel cells, wind energy and geothermal and solar heating equipment, will get even bigger tax savings.
Tax credits in 2009 and 2010 for energy-efficient home improvements
|Windows||Exterior windows and skylights and storm windows|
|Doors||Exterior doors and storm doors|
|Roofing||Metal roofs, asphalt roofs|
Air source heat pump
Gas, oil, propane furnace or hot water boiler
Advanced main air circulating fan
|Water heaters||Gas, oil, propane water heater
Electric heat pump water heater
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 limitsIn 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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