Credit for First-time Home Owners

First-time buyers can claim a credit worth $8,000 or 10% of the home's value, whichever is lower on their 2008 or 2009 taxes. This is through the economic stimulus bill still pending for President Obama's signature.

What's more is that the credit is refundable. Tax filers can refund the full $8,000 even if their total tax bill - was less than that amount.

Here are the requirement to qualify for the credit:

1. purchase must be made between Janaury 1, 2009 and November 30, 2009;

2. buyer may not have owned a home for the past three years;

3. they must live in the house for at least three years, or they will be obliged to pay back the
credit and

4. buyers must also make less that &75,000 for singles of &150,000 for couples.

Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.

Tax Code Modification for 2009

Bonus depreciation for qualified leasehold improvements

Included in President Obama's stimulus package extended into 2009 is a tax code modification that allows 50% bonus depreciation in the first year of life for qualified leasehold improvements and other certain assets.

So, as an example, qualified leasehold improvements of $1 million will yield an immediate federal tax deduction of $500,000 and the remaining basis will be depreciated over 15 years.

Additionally, O’Sullivan said, as more tenants downsize or go out of business, “landlords and tenants should keep in mind that if they abandon or demolish old tenant improvements, they can write off the undepreciated basis and cost of demolition.”

Impact of Real Estate Taxes

Real estate taxes is often an overlooked item, not realizing that it can have a direct impact on business owners who also own their establishment.

“It’s important to plan for business aspects and tax consequences together when working out a deal with the bank,” Eliach cautioned. “You might think, ‘debt forgiveness is good, I’ll get as much of it as I can.’ But depending on how the deal is structured, there could be tax consequences.”


Banks may forgive debt on real property, but businesses should keep in mind that debt forgiveness is generally taxable.

There are provisions in the code for tax deferral in cases of bankruptcy and insolvency, and in some cases, when the debt is greater than the fair market value of the real property.

Cost Segregation

Cost segregation

"No brainer". That's how Jed P. Dallek, of Gassi & Co., describes cost segregation studies for properties.

In cost segregation, depreciation of components of a building is accelerated and have shorter useful lives than the building itself. Commercial buildings generally depreciate over 39 years, while residential structures do so over 27 ½ years. But items such as furniture, fixtures and land improvements have useful lives of five to 15 years. This increases tax deductions as well as cash flow.

According to Scott O’Sullivan, a tax partner at Margolin, Winer & Evens in Garden City, cost segregation studies can be used for new construction projects, acquisitions and substantial renovations. “It generally makes sense if the value of the items to be depreciated is in excess of $1 million,” he said.