In the News: Ten New Tax Breaks For Homeowners

As reported by Forbes:

1. First-Time Home Buyer Tax Credit

   In order to pass the $787 Federal Stimulus Plan, the proposed $15,000 first- time home buyer tax credit was rolled back to $8,000. While that might not entice you to buy a home, Congress did adjust the terms such that the $8,000 loan doesn’t have to be repaid so long as the homeowner stays put for three years.

2. Higher Reverse Mortgage Loan Limits

   The Federal Housing Administration previously had $417,000 limits on what they’d insure, but bumping it up to $625,000 means that many more homeowners with depressed stock portfolios and thus little money to draw on will be able to tap into home equity cash.

3. Higher Conforming Loan Limit

   The government is also empowering the Federal Housing Authority to insure more expensive loans by upping the conforming loan limit to $729,750. For those under that new umbrella it means access to lower mortgage rates, because this insurance makes these loans less risky for banks to issue.

4. Underwater Mortgages

   At around 4.8%, mortgage rates are the lowest they’ve been since the Second World War. Ordinarily, those with debt in excess of their home’s value have not been able to refinance. In an effort to help underwater homeowners, those with a maximum of 105% debt on their home’s value are eligible to refinance as long as Fannie Mae or Freddie Mac backs their loans.

5. Lower Interest Rates

   Homeowners who are in owner-occupied units, not those that own second homes, and didn’t misrepresent their income or utilize no-documentation loans, are eligible for a five-year grace period where their mortgage rates are dropped such that monthly payments equal 31% of gross income if the loan is held by Freddie or Fannie and was written before January 2009. Make your payments on time for those five years and you’ll get $1,000 per year in bonuses.

6. Geothermal Heat Pumps

   In October, Congress issued a credit to cover 30% of cosys of geothermal heaters up to $3,000, yet few were taking advantage. The reason? Geothermal heat pumps often cost $20,000 to buy and install, making $3,000 nice, but not helpful enough. The stimulus package removed the $3,000 cap, but left the 30% of costs benefit.

7. Solar Hot Water

   Solar water systems are eligible for a 30% credit of the initial purchase and installation cost. That’s good news as systems often run between $6,000 and $10,000. The credit is available through 2016, a sizable window to cash in on the benefits of lower cost energy, and is available to those who use the solar system to heat their home’s water, not that of hot tubs or pools.

8. Weatherproofing

   By design, much of the stimulus money will be doled out through programs at the state level, including $5 billion for weatherproofing homes. Homeowners buying foam sealants, caulk and weather stripping are eligible for up to $1,500 in credits for improving the energy envelope of their home, available through 2016.

9. Fuel Cells

   Not many people have fuel cell technology (essentially a giant battery system) in their homes, but if you have enough space, for a cell or microturbine system, the government will kick you back 30% of your costs up to $1,500 per 0.5 kilowatts of power capacity. Put simply, the more energy you can generate, the bigger your credit.

10. Windows, Doors & Roofs

    In bringing back the tax credits of 2007, the government will cover 30% of costs up to $5,000 for windows, doors and roofs that improve energy efficiency. However, homeowners will have to demonstrate that their improvements are expected to last at least five years through the inclusion of a product warranty included with their tax form.

Related posts:

1. In the News: How to nab a low-rate home loan
2. Upside-Down Homeowners & How to Avoid This Fate
3. In the News: Best Home Improvements to Make in a Recession