| In preparation for the 2010 tax season, here's some | | | | Assistance Act of 2009 provides a "long-time resident" |
| clarification on first time home buyers credit | | | | credit. A "long-time resident" is identified as someone |
| qualifications, the 2009 Act extension and you. The | | | | currently purchasing a principal or primary residence |
| Worker, Homeownership and Business Assistance | | | | after having owned and used another home as a |
| Act not only extends the tax credit for first time home | | | | principal or primary residence for at least five |
| buyers, but it also expands who is included as a "first | | | | consecutive years in the eight-year period ending on |
| time home buyer". | | | | the date of purchase of the new home that will now |
| Let's consider how mortgage forgiveness, long-term | | | | be the primary residence. This credit could be up to |
| residence and the first time home buyers credit affect | | | | $6,500 for a segment of the taxpayer population not |
| your tax return. First off, the Mortgage Forgiveness | | | | normally included as "first-time homebuyers". |
| Debt Relief Act of 2007 and the Worker, | | | | Finally, what is qualified principal residence |
| Homeownership and Business Assistance Act of | | | | indebtedness' impact on tax liability? Well, first of all, if |
| 2009 are two different Acts providing different types | | | | this indebtedness has been cancelled, it too may be |
| of assistance. | | | | excluded from income. Which will reduce your taxable |
| The Mortgage Forgiveness Debt Relief Act of 2007 | | | | income and thus, potentially, your tax liability. |
| provides income exclusion for discharged debt on a | | | | Qualified principal residence indebtedness includes: |
| principal residence. Previously, forgiven debt had to be | | | | · Debt incurred in acquiring, constructing or |
| reported as income. Taxpayers may also include debt | | | | substantially improving your principal residence |
| reduced through mortgage restructuring and debt | | | | · Debt secured by your principal residence as |
| forgiven in the case of foreclosure. The provision | | | | a result of refinancing |
| applies in calendar years 2007 through 2012 and can | | | | One point to be noted, cancellation of debt in a Title 11 |
| be used against up to $2 million in forgiven debt. | | | | bankruptcy case does not qualify for this exclusion. |
| The Worker, Homeownership and Business | | | | |