Here are a number of money-saving ways to reduce the amount of tax you owe–or even increase the amount of your refund!

First, let me explain the difference between a tax deduction and a tax credit.  A tax deduction reduces (adjusts) your taxable income. A tax credit reduces your tax dollar for dollar. You do not have to itemize deductions to claim a tax credit.

Tax Deductions for Primary Residence

Tax deductions on your primary residence include:

• Interest paid on your mortgage
• Refinancing points paid in 2009
• Real estate taxes
• Interest on major home improvement loans
• Mortgage insurance premiums
• Home improvements required for medical care
• Any sales commission, legal fees, or closing costs associated with the sale of Virginia Beach VA real estate in 2009

Home Energy Efficiency Improvements Tax Credits

Consumers who purchase and install specific products in their Virginia Beach VA real estate, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in existing homes can receive a tax credit for 30% of the cost, up to $1,500, for improvements “placed in service” starting January 1, 2009, through December 31, 2010. See Federal Tax Credits for Energy Efficiency for a complete summary of energy efficiency tax credits available to consumers.

Residential Renewable Energy Tax Credits

Consumers who install solar energy systems (including solar water heating and solar electric systems), small wind systems, geothermal heat pumps, and residential fuel cell and microturbine systems can receive a 30% tax credit for systems placed in service before December 31, 2016; the previous tax credit cap no longer applies. Details are explained here.

Home Buyer Tax Credit

• First-time buyers who have not owned a home in the last three years are eligible for a credit of 10% of the purchase price, not to exceed $800,000. Ownership of a vacation home or rental property not used as a prime residence does not disqualify a buyer as a first-timer.
• Current home owners, or those who have owned and lived in a principal residence for at least 5 consecutive years of the last 8, may qualify for a credit of up to $6500.

Here are a number of money-saving ways to reduce the amount of tax you owe–or even increase the amount of your refund!

First, let me explain the difference between a tax deduction and a tax credit.  A tax deduction reduces (adjusts) your taxable income. A tax credit reduces your tax dollar for dollar. You do not have to itemize deductions to claim a tax credit.

Tax Deductions for Primary Residence

Tax deductions on your primary residence include:

• Interest paid on your mortgage
• Refinancing points paid in 2009
• Real estate taxes
• Interest on major home improvement loans
• Mortgage insurance premiums
• Home improvements required for medical care
• Any sales commission, legal fees, or closing costs associated with the sale of [city] real estate in 2009
  

Home Energy Efficiency Improvements Tax Credits

Consumers who purchase and install specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in existing homes can receive a tax credit for 30% of the cost, up to $1,500, for improvements “placed in service” starting January 1, 2009, through December 31, 2010. See Federal Tax Credits for Energy Efficiency for a complete summary of energy efficiency tax credits available to consumers.

Residential Renewable Energy Tax Credits

Consumers who install solar energy systems (including solar water heating and solar electric systems), small wind systems, geothermal heat pumps, and residential fuel cell and microturbine systems can receive a 30% tax credit for systems placed in service before December 31, 2016; the previous tax credit cap no longer applies. Details are explained here.

Home Buyer Tax Credit

• First-time buyers who have not owned a home in the last three years are eligible for a credit of 10% of the purchase price, not to exceed $800,000. Ownership of a vacation home or rental property not used as a prime residence does not disqualify a buyer as a first-timer.
• Current home owners, or those who have owned and lived in a principal residence for at least 5 consecutive years of the last 8, may qualify for a credit of up to $6500.

And that’s it for Part I of the tax deductions tutorial for owners of Virginia Beach real estate. The next blog will cover such topics as Educational expenses, Family and Personal deductions, Health and Medical expenses, and reducing your adjusted gross income by declaring taxes paid in 2009.

Also read:

More On New Improved Home Buyer Tax Credit

Virginia Beach Home Buyers Rejoice – Tax Credit Expanded