Greetings neighbors,

As mentioned in one of our previous post "4 Good Tax Laws for Homeowners...", homeowners do have a few things to look forward to in today's improving market. Here are 3 other tax laws many home owners should be aware of.

Surviving Spouse Home Sale Tax Exclusion - Did you know that a widow or widower can receive some tax relief in relation to the sale of the family home due to a provision in the Mortgage Forgiveness Debt Relief Act of 2007?

Typically a seller can exclude up to $250,00 in profit from the primary residence. If sold by a married couple filing a joint return, the tax free amount is $500,000. Previously surviving spouses could take advantage of the full sale exclusion of $500,000 only if the sale occurred during the same year of the spouse's death. If the primary home was sold after the year of death, the surviving spouse was entitled to only $250,000 of the exclusion amount.

However, now the surviving spouse can exclude up to the full amount of $500,000 if the home is sold within two years of the spouse's date of death. In addition, the surviving spouse will still need to meet the regular ownership and use requirements which are the surviving spouse must have utilized the property as their primary residence for two of the five years.

Note: The Surviving Spouse Home Sale Tax Exclusion is currently a permanent law.

Energy - Saving Home Improvements - These particular tax breaks started to appear in the 2005 energy bill and in 2009, those tax benefits were expanded. If you have made qualifying improvements to your home between Feb. 17, 2009 and the end of this year, you are eligible to claim a tax credit up to 30% of the cost of products. The maximum credit cap is $1,500 per homeowner for all home improvements combined. If a homeowner uses more extravagant energy saving improvements such as fuel cells or solar heating equipment they may receive an even larger tax savings.

Second Home Sale Limits - Beginning early 2009, tax laws regarding second home sales were changed to assist in paying for the new housing related tax breaks.

Before, those who owned more than one home could utilize one of the homes as a primary residence for two years, then sell the home, and keep any gains tax free up to $250,000 if single or $500,000 if owned by a married couple filing joint returns. Now, it is taken into consideration the total amount of time the property was used as an investment property or second home. Now, owners will owe tax on part of the money gained based on the length of time the home was used as a second home opposed to a primary home.

Note: This is currently a permanent tax law change.