Tax Credit For Existing Home Owners

When new homebuyers received preferential treatment from the IRS, consumers demanded a tax credit for existing home owners as well. It is a well known fact that there are already a number of such credits in existence, even though a new one was temporarily added. Which tax credit for existing home owners do you qualify for?

Supplies needed:

• Hud-1
• IRS Form 5405
• Schedule A

Prior to applying for any tax credit for existing home owners, make sure that you actually meet all of the eligibility requirements.

1. Prove your long-time resident qualification. It is possible to file IRS Form 5405 and receive a $6,500 first time homebuyer credit, even if you have owned a home just recently. To claim this tax credit for existing home owners, prove that you have lived at the residence for the last five years preceding the new home’s purchase. This time frame must be continuous.
2. Claim points paid during a refinance. Another tax credit for existing home owners is the money paid in points. This usually takes place when refinancing a home. Ask a tax advisor for the most advantageous means of claiming them on current–and perhaps also future–tax returns.
3. Deduct mortgage interest on Schedule A. File the long form of the individual tax return and itemize deductions. Schedule A allows you to recoup the amount of money spent on interest when paying the mortgage for the preceding year. Make sure that the sum of itemized deductions is higher than the standard deduction.
4. Qualify for “green” credits. Updates to the home that are considered environmentally friendly oftentimes also carry a tax credit for existing home owners. Consult with a tax advisor to see if there are both state and federal credits to apply for. Make sure you have all the documentation of the home improvement materials when making these claims.

There is many a tax credit for existing home owners that the taxpayer may claim. They usually require excellent record-keeping to ensure that any questions (later on) can be answered in case of an audit.