Newton, MA (PressExposure) September 18, 2008 -- The Housing Act is meant to prevent further fall-out from the housing market; tighten lending practices and reform financial institutions associated with the ailing housing market.
Rodman & Rodman, P.C. summarizes the tax changes related to the new legislation for individuals and businesses.
Eligible first time homebuyers who purchase a principal residence between April 8, 2008 and July 1, 2009 may receive a refundable tax credit for 10 percent (or up to $7,500, whichever is less) of the purchase price in the year of purchase. Starting with the second year after purchase, the taxpayer must start repaying the credit pro-rata over 15 years with no interest. The credit phases out for taxpayers with modified adjusted gross income between $75,000 to $95,000 ($150,000 to $170,000 for joint tax filers).
In tax year 2008, an additional state and local property tax deduction may now be claimed by individual and joint tax filers who claim the standard deduction instead of itemized deductions. The deduction may not exceed state or local property taxes and the maximum deduction is $500 for individual tax filers or $1,000 for joint filers.
For individual and joint tax filers who convert their second home to a principal residence and then sell that home, the Code Sec. 121 home sale exclusion may not be used to offset gain allocated for the period the second home was not used as a principal residence.
With regard to businesses, the gross amount of credit and debit card payments a merchant receives during the year will now be reported to the IRS by banks and online payment networks. For merchants with annual credit and debit card transactions exceeding $20,000 in the aggregate and/or if the aggregate number of transactions exceeds 200 during the year, then information reporting for third party network transactions will also be required. This will commence after the calendar year 2010.
âThe Housing Act will have a significant impact on both individuals and businesses. The Act is fairly complex, so business owners and individuals who are uncertain of the tax changes should consult their accountant,â explained Steven P. Rodman, CPA, MST, president of Rodman & Rodman, P.C.
Rodman & Rodman, P.C. Founded in 1961, Rodman & Rodman, P.C. provides accounting, tax and business services to small and medium-sized companies throughout New England. With a focus on strategic planning, Rodman & Rodman goes beyond traditional accounting services and takes a proactive approach when serving clients to increase, preserve and sustain clientsâ financial net worth.
From business valuations, taxation, audits, fraud detection and prevention services and succession planning to a variety of accounting IT services including software selection, implementation and training, the team at Rodman & Rodman serves as comprehensive advisors to clients. For individual clients, the company offers personal advisory services such as planning for real estate transactions, obtaining financing, estate planning and retirement planning as well as planning for college education. Rodman & Rodman Certified Public Accountants are located at 3 Newton Executive Park in Newton, Mass. For more information, visit their website at http://www.rodmancpa.com or contact Jen Reading at (617) 965-5959.