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As part of the extension of unemployment benefits, Congress passed (and the President is expected to sign into law today, November 6) a wide ranging bill that includes provisions to extend and expand the homebuyers’ tax credit and also expands a stimulus law provision that will help businesses struggling in the down economy.
The bill extends the $8,000 tax credit for first-time homebuyers that was set to expire on November 30, 2009. Now, a purchase contract must be in place before May 1, 2010 on a primary residence priced up to $800,000. The bill also raises the income limits to $125,000 for singles and $225,000 for couples, before the credits begin to phase out. The previous limits were $75,000 and $150,000, respectively.
A new tax credit was also created for up to $6,500 for existing homeowners who buy a primary residence if they have lived in their current home for at least five (5) of the last eight (8) years. The previous tax credit only applied to what Congress defined as first-time homebuyers.
A tax break included in the $787 billion stimulus package in February that was previously limited to small businesses was expanded to include all businesses. This expansion allows struggling businesses to deduct losses for 2008 and 2009 from profits in the five (5) previous profitable years before 2008. Under current law, the so-called net-operating loss carryback is only allowed for two (2) years. This will allow applicable businesses to obtain refunds for taxes paid for those five (5) years. The original law only allowed losses in 2008 to be applied. Two restrictions: any refunds for taxes in the fifth year will be reduced by 50%; and any company that received TARP money would be ineligible.
If you have any questions about these new or expanded tax breaks, and how they might effect your particular situation, we would be happy to discuss them with you.
Curtis & Curtis, P.C. is a full service law firm located in Jackson, Michigan providing superior legal services and advice to individuals, families and businesses throughout mid-Michigan since 1901.
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