New Tax Breaks for Home Owners

Real Property Tax Deduction: Non-itemizers may claim an additional standard tax deduction for state and local real property taxes. The maximum additional tax deduction is $500 ($1,000 on a joint return).

Refundable First-time Homebuyer Tax Credit: Taxpayers who purchased a principal residence after April 8, 2008, through June 30, 2009, and who have not owned a principal residence in the previous 3 years may claim a refundable tax credit for 10% of the purchase price. The maximum credit is $7,500 ($3,750 Married Filing Separately). Eligibility for the credit phases out for modified AGI between $75,000–$95,000 ($150,000–$170,000 Married Filing Jointly). The tax credit is repaid in 15 equal installments starting in 2010. Repayment is accelerated if the home is sold or no longer used as a principal residence.

Itemizing Tax Deductions
When you purchase a home, you're more likely to be able to itemize tax deductions on Schedule A. The following are more common itemized tax deductions not related to your home:

• medical and dental expenses
• state and local income tax or sales tax
• personal property taxes (usually on your car)
• gifts of cash and property to qualified religious and charitable organizations
• casualty and theft losses
• tax preparation fees
• investment expenses