Cut Your Ormond Beach FL Taxes with Real Estate

This tax season, think real estate to save on your 2010 taxes.

*Installing energy-efficient home improvements like windows and doors in your principal residence will qualify you for a tax credit.

The credit equals 30 percent of the cost, capped at a maximum of $1,500. There's another credit of 30 percent of the cost of installing renewable-energy improvements like solar water heaters and solar panels. This credit isn't capped, and the residence doesn't have to be your principal residence. For detailed information on the laundry list of items that qualify for the two credits, go to www.energytaxincentives.org.

*You've probably also read of the tax credits for homebuyers. There are two kinds of credits for homes costing under $800,000. One is a credit of up to $8,000 for first-time buyers of a principal residence who didn't own another principal residence during the three-year period ending on the date they purchase the new place. The other is up to $6,500 for buyers who owned a principal residence for any five consecutive years during the eight-year period that ends on the purchase date. Both credits allow buyers with higher incomes to qualify and require them to sign a binding contract by April 30, 2010, and complete the deal by June 30, 2010.

A principal residence is not just a conventional single-family home. It also can be a condominium, a co-op apartment, a housetrailer, a mobile home or anything else that provides all the amenities of a dwelling, such as a houseboat or yacht that has facilities for cooking, sleeping and sanitation.

*Is a tax credit like a deduction off my taxes? As explained by Julian Block on NewsGeni.us, "Most taxpayers do not understand the difference between credits and deductions. Credits lower a person's taxes dollar for dollar, making them more valuable than deductions, which merely reduce the amount of income on which taxes are figured. The distinction is critical. A deduction of $1,000 saves $350 in taxes for someone in the highest bracket of 35 percent, but only $100 for someone in the lowest bracket of 10 percent. A credit of $1,000 reduces taxes by that amount, whatever someone's bracket is.

"Another difference is that credits come in two flavors, nonrefundable and refundable. Nonrefundable means credits cannot be refunded to the extent that they exceed your income tax. Put another way, credits like the one for child care provide no help after your income tax becomes zero. Refundable means credits like the recently revised one for first-time homebuyers can be refunded to the extent that they exceed your income tax. So even buyers who have no income-tax liability could receive as much as $8,000 from the IRS. "

If this confuses you, contact me to talk about ways you can save on your taxes and buy real estate this Spring. Search Ormond Beach homes for sale, and call me to preview your favories. Don't lose these real estate opportunities in Ormond Beach!

Sherry Armstrong, Realtor
386-679-3191
yourkeytothebeach@gmail.com
www.sherryarmstrong.com