I wrote over at Shak & Jill that tomorrow is a HUGE closing day across the country because home buyers taking advantage of the federal tax credit for first-time home-buyers don’t want to delay closing until the last minute so it’s this week and next week that title companies are extremely busy.

To qualify for the tax credit, purchase and sales contracts needed to be binding by April 30th and the mortgage loan must close no later than June 30th.  However according to MSNBC, Senate Majority Leader Harry Reid is proposing an extension,

Senate Majority Leader Harry Reid, D-Nev., said Thursday he wants to give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000. Under the current terms, buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.

From the real estate perspective, the National Association of Realtors is pushing for agents to contact members of Congress to grant the extension.  The extension would be partnered with extending jobless benefits until the end of November.

What do you think?  It’s not a new tax credit, just an extension of the one whose deadline is looming.  20 days and counting.

Photo from 3 Chic Chicks and Chicken Scoop for the Soul.

When it comes to preparing your taxes, you want to be careful. It’s not just about avoiding a tax audit. In fact, you might need to overcome some assumptions when you are ready to file. And, whether you file yourself, or have a tax professional take care of it, there are a few things to keep in mind. Roni Deutch, “The Tax Lady” offers some insight into items that you might overlook when preparing your taxes. As you get your 2009 tax return together, and as you plan for taxes in 2010, consider The Tax Lady, and keep these 5 things in mind:

1. Changes to your family: Childbirth, college, having your parents move in, marriage and divorce can all affect the tax breaks you are eligible for.

2. Home changes: When you move, there are deductions associated with your situation. And don’t forget the homebuyer tax credit.

3. Job changes: All things related to the job search can affect your tax return, especially with rules for unemployment benefits.

4. Major purchases: If you made a large purchase, let your tax preparer know. It may be nothing, but it may also impact your situation.

5. Bankruptcy: Your taxes are filed differently, depending on the kind of the bankruptcy you have. Be sure to have someone knowledgeable help you this.

2010 is going to be an interesting year for taxes. There are a number of tax breaks available that haven’t been available before. Here are two home-related tax moves for you to consider in 2010:

1. Buy a Home

The first time home buyer tax credit has been expanded and extended so that you can get the $8,000 first time tax credit until the end of April. Additionally, if you already own, you can get up to $6,500 when you buy. If you are planning to buy in the next couple of years, this might be the year to do.

2. Green Home Improvements

If you are thinking of making your home more energy efficient, 2010 is your year. There are tax credits available for putting in solar home heating systems, replacing your windows, adding insulation, and more.

Plan out the year ahead so that you can do your best to reduce your tax liability. Figure out what you want, and then decide how you can make it work within your budget.

It’s tax time, and you probably know that you can deduct your mortgage interest on your taxes. However, it’s not just your mortgage interest. There are other deductions related to having a mortgage and having a home. Here are some of the deductions to avoid overlooking as you start getting into gear for tax season:

* Points paid this year for a home mortgage to reduce the interest rate.

* PMI.

* Property taxes.

* Green home improvements.

There are plenty of opportunities to reduce your tax liability. Think about what you have done with your home this year, and consider what might be eligible. If you have a question about what is eligible, and how you can take your tax deduction, you should contact a tax professional or the IRS.

Now that the year is drawing to a close, it’s time to consider your taxes. It’s always best to prepare as early in advance as you can. This way you’ll be less stressed. And one of the things to watch out for is the mortgage interest statement from your lender or loan servicer. Keep watch for all these items in the mail right after the first of the year, and file them away together.

Then consider whether or not you should take the mortgage interest deduction. Look at how much interest you paid on your home mortgage loan this year, and see whether, with other deductions, it exceeds the standard deduction. For most tax filers, you will have a standard deduction of $5,700 for single and $11,400 for married filing jointly.

You can itemize to see if you can exceed that amount. Add up your charitable donations, mortgage interest paid and other deductible items on Schedule A of Form 1040. If you end up with more than the standard deduction, you are ahead to itemize. Don’t settle for the standard deduction when you could very well get a bigger deduction.

Reading Taxgirl has once again tipped me off to an interesting situation in the world of the housing market. This time, it’s the fact that the first time home buyer tax credit is (gasp) being abused. This isn’t terribly surprising; criminals will always find a way to profit dishonestly from just about anything. But with talk of extending the deadline for the first time home buyer tax credit, it becomes to figure out just how rampant this fraud is. Here is what Taxgirl reports on the situation:

The IRS announced earlier this week that it is investigating more than 100,000 “doubtful claims” related to the credit. In fact, to date, the IRS has instigated 107,000 civil claims related to the credit – about 8% of the taxpayers who’ve applied for the credit. A quick turn of the math shows that to be up to $800 million in potentially false credit.

That’s a lot of money. And it could also mean that some people who have bought homes may have to repay their tax credit. If you figure that in, it becomes clear that more foreclosure are on the horizon, since repaying the tax credit is probably something that these fraudsters can’t afford to do.

And, of course, there is likely to be taxpayer outrage over this whole thing. After all, it’s our money that is being wasted on these fraudulent schemes.

The big focus right now, as the deadline for the first time home buyer tax credit extension approaches, is on plans that will extend the first time home buyer tax credit — and maybe even expand it to include all buyers, and not just first time home buyers. As expected, industry groups including the Mortgage Bankers Association and the National Association of Realtors are lobbying hard for an extension of the credit. HousingWire reports on a letter the groups sent to various Obama Administration officials:

“Our fragile economy is just beginning to show signs of recovery. We should not jeopardize that recovery by letting this tax credit expire,” said the letter, sent to the White House and the secretaries of the departments of Treasury and Housing and Urban Development (HUD). “Problems in the housing industry led us into a global recession, and housing incentives can help lead us out of the recession.”

The debate over what to do about the first time home buyer tax credit is one that has far reaching implications. Indeed, there is speculation that the dependence that the housing market has on the tax credit right now might become permanent. In that case, some say, what is to prevent giving a tax credit to anyone buying a home in the future, in the same way that a tax advantage is offered for mortgage interest paid over the course of the year.

As you might image, people on both sides of that argument are weighing in. Some feel that a permanent tax credit would be helpful in allowing more people to buy homes in the future. On the other side are those that worry about cutting tax revenue and getting further into debt as a country with yet another generous tax credit.

What do you think? Should a tax credit for buying a home be made a permanent part of the tax code?

Today is Blog Action Day. I participate every year. This year’s cause is climate change, and raising awareness of the problem. So I thought that it would be appropriate to share some of the the green home improvements that you can make in order to qualify for some particular tax credits. You can get more information on green tax credits at the governments Energy Star site. But here are some of the things you can do:

* Windows

* Doors

* HVAC

*Biomass stoves

* Water heaters

* Geothermal heat pumps

* Solar panels

* Wind energy systems

There are restrictions as to how much of the cost is covered, and limits on some of the items. If you have the equity available in your home, you can finance these changes, and get an additional tax break for the interest you pay on the loan. You should also look for state and local grants and programs. For example, my parents are taking advantage of a program in their hometown where the city gives them an interest-free loan for two years to help them replace their windows.

Things haven’t been that great at Citigroup Inc over the past year or so. Citi is one of the banks that ran into trouble with subprime mortgage loans and issues when things went south in the global financial crisis. However, that’s not all Citi has been having problems with. The company is expected to see a $600,000 fine by the Financial Industry Regulatory Authority.

FINRA is reportedly levying the fine due to the fact that Citi might have helped some derivatives clients avoid paying taxes on their dividends. Clearly, UBS is not the only bank aiding its clients in tax evasion. Additionally, it is clear that the specter of derivatives continues to haunt the financial system.

Some believe with proper transparency and regulation, there is nothing wrong with derivatives, while others think that these financial instruments should be outlawed altogether. In the end, it will be interesting to see what happens — and whether Citi really does have to pay up.

Image by alexkess via Flickr

One of the things that has helped stabilize the housing market and create an increase in mortgage applications has been the first time home buyer tax credit. Indeed, more than 1.2 million homes have been purchased with the help of the tax credit. And this is one of the reasons that homes prices are starting to rise again, and sales have increased. As a result, it is little surprise that there is some discussion about extending the first time home buyer tax credit deadline by six months. Real Estate Pro Articles reports on the move:

Conflicting opinions abound over the possible extension of the tax credit. Initially offered as part of the government’s stimulus plan for the US economy, the potential costs associated with a six month extension of the credit are expected to reach around $15 billion, further straining the budget deficit of the US economy. Understandably, the financial aspect is the main concern over the approval of an extension of the credit following the November 30 deadline.

However, there are concerns that the housing market will slip back into stability without the first time home buyer tax credit. Some are even suggesting that the tax credit be increased to $15,000, and offered to everyone. That way, those who are “trading up” could also take advantage of the tax credit, and it would get things moving at the top of the market as well as the bottom of the housing market, which is heating up.

In the end, though, it will be interesting to see what happens. And it will also be interesting to see, if the measure is approved, whether or not this merges into a permanent tax credit for buying a home, much as we see a tax credit for mortgage interest.