By Cara Baruzzi, Register Business Editor

Much attention has been paid in recent months to the government’s efforts to boost home ownership — namely, a first-time home buyer tax credit and a more recent credit for repeat buyers — and those who own houses can reap several benefits this tax season, whether they claim those particular credits or not.

There are various tax issues homeowners should be aware of when filing their tax return this season, according to the Connecticut Society of Certified Public Accountants. Among them:

‰ There are breaks for first-time buyers and others. Late last year the government extended an $8,000 tax credit for first-time homebuyers, who are defined as those who have not owned a home in the past three years.

Originally set to expire Nov. 30, the credit now applies to sales that occur on or after Jan. 1, 2009, and on or before April 30. In cases where a binding sales contract is signed by April 30, a home purchase completed by June 30 may qualify.

Additionally, a $6,500 tax credit for repeat homebuyers is available to eligible people who buy a principal residence after Nov. 6, 2009, and on or before April 30. The credit also applies to eligible purchases made by June 30 when a binding sales contract is signed by April 30.

Anyone who has bought, or will buy, a house between Jan. 1, 2009, and April 30 should inquire about the credits, said Bill Saas, a certified public accountant and partner at Saas Kirwan Associates in Wallingford.

“Be alert,” he said, urging consumers to keep up to date on recent changes made to the credits. “You might be in for a big tax break. It’s worth the effort.”

‰ Existing deductions remain in effect. Beyond the newer tax credits, previous tax benefits for home-owners still exist.

“There’s no place like home; even the IRS acknowledges it,” Saas said.

Consumers should consult IRS publication No. 17, a free booklet containing comprehensive tax law information, he said. Continued...

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IRS forms and publications are available online at www.IRS.gov.

As a general rule, homeowners can deduct the interest they pay on a mortgage that is less than $1 million, as well as any property taxes they pay. Also, they typically may deduct the interest on home equity loans that amount to less than $100,000.

Saas also noted that certain tax credits, which reward homeowners for implementing more energy efficient upgrades, were eliminated in 2008 but returned last year.

“A lot of people are now eligible for energy credits. That came back in style in 2009 after vanishing for a year,” he said.

IRS Form 5695 contains information on claiming energy-related credits.

There also are certain deductions for those who base a business out of their home, Saas said.

‰ Affordability is key. While beneficial, tax benefits are not going to save those who aren’t financially prepared to buy a house.

Before they sign a contract, prospective buyers should carefully examine their financial situation to ensure their income will cover the costs of home ownership. Those costs include not only monthly mortgage payments, but also property taxes and insurance payments, as well as maintenance and repair expenses.

Consumers should not allow a tax break, or any other incentive, to tempt them into buying a home they cannot truly afford.

Contact Cara Baruzzi at cbaruzzi@newhavenregister.com or 203-789-5748.

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