Tax Breaks for Military Families

Military service is a tough job, but it comes with privileges at tax time.
By Kimberly Lankford, Kiplinger.com

Service members get a tax-free housing allowance, can qualify for tax-free pay while serving in a combat zone and have an extended tax-filing deadline while deployed — giving them up to 180 days after returning from a combat zone to file their tax return.

They can also stockpile extra money for retirement in tax-deferred accounts. Not only can military personnel stash up to $16,500 in the federal Thrift Savings Plan in 2010, but they can also contribute all of their tax-exempt combat-zone pay (as long as total TSP contributions for the year don’t exceed $49,000). Tax-exempt pay that goes into the TSP comes out tax-free in retirement. At the same time, they can contribute up to $5,000 to an IRA ($6,000 if 50 or older), even if their entire yearly income is tax-exempt combat pay.

Homeowner breaks. And now service members serving outside the U.S. for at least 90 days between December 31, 2008, and May 1, 2010, have an extra year to qualify for the $8,000 first-time home-buyer credit or the $6,500 credit for current homeowners. They have until April 30, 2011, to sign a contract and until June 30, 2011, to close on the new house. Normally, if homeowners don’t live in the new house for at least three years, they have to repay the tax credit. But there’s an exception for members of the military who have to relocate because of government orders.

Military families also get a special break when they sell their homes. Most homeowners need to live in a house for at least two of the five years leading up to the sale in order to claim tax-free profits of up to $250,000 ($500,000 if married filing jointly). But because they move frequently, military families need to live in the house for only two of the preceding ten years in order to qualify if they are on qualified official extended duty, which means living at least 50 miles from home or in government quarters.

Provided by Bill Calder of Cunningham Mortgage

NEW HOMES SALES JUMP 27% BIGGEST GAIN IN 4 YEARS!

USA Today

Sales of new homes surged 27% last month exceeding expectations. The Commerce Department said Friday that new home sales rose in March to an adjusted annual sales pace of 411,000. It was the strongest month since July 2009 and the biggest monthly increase in 47 YEARS! The median sales price was $214,000.

Bank owned and foreclosed properties can often be purchased for many thousands below value, although not all foreclosures are bargains.

1) Ask your agent to do a current market analysis on any property you are considering to determine fair market value.

2) Be sure you are prequalified with a lending institution before you begin shopping for foreclosures. Once you find a tru bargain, you will need to act quickly. Your real estate agent can assist you in getting prequalified.

3) Most VA owned properties have special financing for the property. If you are planning to live in the property it may be 100% financing. If you are an investor, it may be 95% financing. On VA properties, special loan programs are not credit score driven.

Choice Jacksonville specializes in gonernment and bank owned properties, please call us at 910-455-7284 for a list of foreclosures. We are constantly looking for bargains in order to serve our clients.