Uncle Sam's Gift

Recently, I sat down to do my 2008 tax return and I was crossing my fingers for a big huge return since I bought my first house in 2008 and finally I am itemizing on the 1040! However, I wasn't delusional about a big return for a number of reasons:

1. I signed that natural gas 'lease' (mineral rights) last May, which paid me $3600 (tax wasn't taken out), so I had to report "rental income" of $3600. Yuck (but I'm TOTALLY not complaining about that - it was basically 'free' money that I never anticipated!).

2. I sold some mutual fund shares to come up with my 20% down payment on the house.....which produced a bunch of capital gains.

3. I earned more this year than last year, so you are just paying more and more taxes!

4. I bought my house in April, so my first house payment wasn't until June....so the amount of mortgage interest I paid and was able to deduct was only half the year's worth.

5. I didn't have a "Homestead exemption" for 2008 - you have to live in the house on January 1st of a given year in order to get the exemption for that year. I just took care of that last month, so it will be in effect for 2009. YES!

6. I ended up owing the state of Ohio $21.00 on my partial-year resident Ohio state return - for about 2.5 months of living there. Oh well - it's almost a wash.

With that said, a few things also helped me - I was able to deduct my moving expenses (mileage for me to drive 1,150 miles, hotel for the trip down, moving company) as well as the added benefit of itemizing (due to mortgage interest and property taxes). Plus, there is no state income tax in Texas, so that was one less return to file! Yippee!!

OK, but here's the real reason for this post - in 2008, they have a "First-Time Homebuyers Credit" that I barely qualified for....you had to have bought your house AFTER APRIL 8, 2008 to qualify. My closing date?? April 16, 2008! I just barely made it! Basically, it's an interest-free loan from the federal government. I was able to get $7,500 of a credit and then you repay it (interest-free) over 15 years - $500/year that you have to add on as 'additional tax' in the Taxes section of the 1040. And the repayment doesn't start until 2 years after you claim the credit. So I will receive the $7,500 now and not pay my first $500 on a return until 2010. It's a pretty sweet deal!

PS - You know you are either getting old or are a HUGE dork when you blog about how excited you are to do your taxes. I think it's both in this case. :)