A Pleasant Tax Surprise for Long-Time Homeowners

Lots of political and legislative attention is focused on the troubled housing market and how to revive it.

Tax laws passed since 2006 when the mortgage market suffered a meltdown have, understandably, offered aid to taxpayers at risk of losing their homes and to those who would like to be homeowners.

But the latest tax act, The Housing Assistance Tax Act of 2008, also contains a little surprise, or reward, if you will for long-time homeowners. It’s a decrease in their federal tax bills, worth $75 and up for single homeowners and $150 and up for married homeowners.

If you’ve owned your home awhile, paid your mortgage year in and year out, or even paid your mortgage off altogether, you are probably what’s known in the tax world as a “non-itemizer.”

That means, because you don’t have enough deductions to itemize (such as hefty mortgage interest payments), you’ll pay less tax by taking the standard deduction. Those who don’t itemize don’t get a tax deduction for their property taxes.

The new tax act, however, gives non-itemizers a federal deduction for state and local property taxes, for the year 2008 only. If you’ve been a responsible mortgage holder, your reward should be waiting when you file your taxes in 2009. For more information, read 2008 Property Tax Deduction for Taxpayers Who Don’t Itemize.

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