As tax time approaches, businesses in the real estate and construction sectors will have to reconcile a challenging 2009. However, several pieces of legislation were signed into law over the course of the year that can provide some assistance, particularly to the residential construction industry. Before starting on your 2009 tax return, you should be aware of the following provisions.
There is good news for those individuals interested in buying or selling a home. On November 6, 2009, President Obama signed into law the Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548), which includes provisions designed to enhance the homebuyer tax credit program.
The new law extends the expiration date of the first-time homebuyer credit from November 30, 2009 to April 30, 2010. If a first-time homebuyer enters into a binding contract before May 1, 2010 to purchase a principal residence and the sale closes before July 1, 2010, then the homebuyer will be eligible for a maximum credit of $8,000. In this context, a first-time homebuyer is an individual (and, if married, the individual’s spouse) who has not owned a principal residence during the last three years prior to purchasing the home that qualifies for the credit.
With the recently passed law extending the carryback period to five years for net operating losses, companies and individuals are looking for ways to maximize their available tax refunds. Accelerating tax deductions into 2009 through a cost segregation study can greatly enhance the available refunds.
Cost segregation studies can be performed on new and old buildings to determine what portion of the building may be classified as personal property. Once a portion of a building is classified as personal property it can be depreciated over a much shorter tax life. When studies are done on buildings that have previously been placed in service, you can catch-up the depreciation on the reclassified personal property. This can result in significant deductions in the year the study is completed.
As the end of the year approaches, now is the time to evaluate your business and your personal tax strategies. By taking the time to prepare now, using this checklist, you will be able to develop a clearer picture of what your tax picture will look like while there’s still time to maximize current-year savings.
Look to maximize tax-deductible retirement plan contributions. The following table provides the maximum amounts that can be deferred under several popular retirement plan options during 2009.
On November 6, 2009, President Obama signed into law the Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548), extending and enhancing a popular but temporary tax incentive — the five-year net operating loss (NOL) carryback provisions.
Under the new law, the expanded five-year NOL carryback, which was originally available to qualifying small businesses for their years beginning in 2008, has been extended and enhanced to include 2009 NOLs for nearly all businesses, regardless of size. Qualifying small businesses that utilized the five-year carryback provisions for their 2008 tax year may also take advantage of the five-year carryback provisions for 2009.
