53015058KTax
Information for
First-Time
HomeownersReminders 1Introduction1What You Can and Cannot Deduct2Real Estate Taxes2Sales Taxes3Home Mortgage Interest3Mortgage Interest Credit6Figuring the Credit6Basis8Figuring Your Basis8Adjusted Basis9Keeping Records9How To Get Tax Help11Index12RemindersLimit on itemized deductions.
Certain itemized deductions (including taxes and home mortgage interest) are limited if your adjusted gross income is more than $145,950 ($72,975
if you are married filing separately). For more information, see the Instructions for Schedule A (Form 1040).
Photographs of missing children.
The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children
selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
This publication provides tax information for first-time homeowners. Your first home may be a house, condominium, cooperative apartment, mobile
home, houseboat, or house trailer.
The following topics are explained.
How you treat items such as settlement and closing costs, real estate taxes, sales taxes, home mortgage interest, and repairs.
What you can and cannot deduct on your tax return.
The tax credit you can claim if you received a mortgage credit certificate when you bought your home.
Why you should keep track of adjustments to the basis of your home. (Your home's basis generally is what it costs; adjustments include the
cost of any improvements you might make.)
What records you should keep as proof of the basis and adjusted basis.
District of Columbia first-time homebuyer credit.District of Columbia first-time homebuyer creditCredit:District of Columbia first-time homebuyer
You may be able to claim a one-time tax credit of up to $5,000 ($2,500 if married filing separately) if you buy a main home in the District of
Columbia. You must reduce the basis of your home by the amount of the credit you claim.
The credit is not allowed if you acquired your home from certain related persons or by gift or inheritance.
You qualify for the credit if you (and your spouse if you are married) did not have an ownership interest in a main home in the District of
Columbia for at least 1 year before buying the new home. Individuals with modified adjusted gross income of $90,000 or more ($130,000 or more in the
case of a joint return) cannot claim the credit. Individuals with modified adjusted gross income between $70,000 and $90,000 (between $110,000 and
$130,000 in the case of a joint return) can claim only a reduced credit.
Use Form 8859, District of Columbia First-Time Homebuyer Credit, to figure your credit. See the form and its instructions for more information.
Comments and suggestions.Comments on publicationSuggestions for publication
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Internal Revenue Service
Individual Forms and Publications Branch
SE:W:CAR:MP:T:I
1111 Constitution Ave. NW, IR-6406
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in
your correspondence.
You can email us at
*taxforms@irs.gov. (The asterisk must be included in the
address.) Please put Publications Comment on the subject line. Although we cannot respond individually to each email, we do appreciate your
feedback and will consider your comments as we revise our tax products.
Tax questions.
If you have a tax question, visit
www.irs.gov or call 1-800-829-1040. We cannot answer tax questions at either
of the addresses listed above.
Ordering forms and publications.
Visit
www.irs.gov/formspubs
to download forms and publications, call 1-800-829-3676, or write to the National Distribution Center at the address shown under How To Get Tax
Help in the back of this publication.
Publication523Selling Your Home527Residential Rental Property547Casualties, Disasters, and Thefts551Basis of Assets555Community Property587Business Use of Your Home936Home Mortgage Interest DeductionForm (and Instructions) Mortgage Interest Credit
See How To Get Tax Help, near the end of this publication, for information about getting publications and forms.
What You Can and Cannot DeductWhat you can and cannot deduct
To deduct expenses of owning a home, you must file Form 1040 and itemize your deductions on Schedule A (Form 1040). If you itemize, you cannot take
the standard deduction. See the Form 1040 instructions if you have questions about whether to itemize your deductions or claim the standard deduction.
This section explains what expenses you can deduct as a homeowner. It also points out expenses that you cannot deduct. There are two primary
discussions: taxes and home mortgage interest. Generally, your real estate taxes and home mortgage interest are included in your house payment.
Your house payment.House payment
If you took out a mortgage (loan) to finance the purchase of your home, you probably have to make monthly house payments. Your house payment may
include several costs of owning a home. The only costs you can deduct are real estate taxes actually paid to the taxing authority and interest that
qualifies as home mortgage interest. These are discussed in more detail later.
Here are some expenses, which may be included in your house payment, that cannot be deducted.
Fire or homeowner's insurance premiums.
FHA or other mortgage insurance premiums.
The amount applied to reduce the principal of the mortgage.
Minister's or military housing allowance.Minister's or military housing allowanceHousing allowance, minister or military
If you are a minister or a member of the uniformed services and receive a housing allowance that is not taxable, you still can deduct your real
estate taxes and your home mortgage interest. You do not have to reduce your deductions by your nontaxable allowance.
Nondeductible payments.Nondeductible payments
You cannot deduct any of the following items.
Insurance,
Insuranceincluding fire and comprehensive coverage, and title and mortgage insurance.
Wages you pay for domestic help.
Depreciation.
The cost of utilities, such as gas, electricity, or water.
Most settlement costs. See Settlement or closing costs under Cost as Basis, later, for more information.
Real Estate TaxesReal estate taxesTaxes:Real estate
Most state and local governments charge an annual tax on the value of real property. This is called a real estate tax. You can deduct the tax if it
is based on the assessed value of the real property and the taxing authority charges a uniform rate on all property in its jurisdiction. The tax must
be for the welfare of the general public and not be a payment for a special privilege granted or service rendered to you.
Deductible Real Estate TaxesReal estate taxes:DeductibleDeduction:Real estate taxes
You can deduct real estate taxes imposed on you. You must have paid them either at settlement or closing, or to a taxing authority (either directly
or through an escrow account) during the year. If you own a cooperative apartment, see Special Rules for Cooperatives, later.
Where to deduct real estate taxes.
Enter the amount of your deductible real estate taxes on Schedule A (Form 1040), line 6.
Real estate taxes paid at settlement or closing.Real estate taxes:Paid at settlement or closingSettlement or closing costs:Real estate taxes
Real estate taxes are generally divided so that you and the seller each pay taxes for the part of the property tax year you owned the home. Your
share of these taxes is fully deductible, if you itemize your deductions.
Division of real estate taxes.
For federal income tax purposes, the seller is treated as paying the property taxes up to, but not including, the date of sale. You (the buyer) are
treated as paying the taxes beginning with the date of sale. This applies regardless of the lien dates under local law. Generally, this information is
included on the settlement statement you get at closing.
You and the seller each are considered to have paid your own share of the taxes, even if one or the other paid the entire amount. You each can
deduct your own share, if you itemize deductions, for the year the property is sold.
Example.
You bought your home on September 1. The property tax year (the period to which the tax relates) in your area is the calendar year. The tax for the
year was $730 and was due and paid by the seller on August 15.
You owned your new home during the property tax year for 122 days (September 1 to December 31, including your date of purchase). You figure your
deduction for real estate taxes on your home as follows.
1. Enter the total real estate taxes for the real property tax year $7302. Enter the number of days in the property tax year that you owned the property 1223. Divide line 2 by 365 .33424. Multiply line 1 by line 3. This is your deduction. Enter it on Schedule A (Form 1040), line 6$244
You can deduct $244 on your return for the year if you itemize your deductions. You are considered to have paid this amount and can deduct it on
your return even if, under the contract, you did not have to reimburse the seller.
Delinquent taxes.
Delinquent taxes are unpaid taxes that were imposed on the seller for an earlier tax year. If you agree to pay delinquent taxes when you buy your
home, you cannot deduct them. You treat them as part of the cost of your home. See Real estate taxes, later, under Cost as
Basis.
Escrow accounts.Escrow accounts
Many monthly house payments include an amount placed in escrow (put in the care of a third party) for real estate taxes. You may not be able to
deduct the total you pay into the escrow account. You can deduct only the real estate taxes that the lender actually paid from escrow to the taxing
authority. Your real estate tax bill will show this amount.
Refund or rebate of real estate taxes.Real estate taxes:Refund or rebateRefund of:Real estate taxes
If you receive a refund or rebate of real estate taxes this year for amounts you paid this year, you must reduce your real estate tax deduction by
the amount refunded to you. If the refund or rebate was for real estate taxes paid for a prior year, you may have to include some or all of the refund
in your income. For more information, see Recoveries in Publication 525, Taxable and Nontaxable Income.
Items You Cannot Deduct
as Real Estate Taxes
The following items are not deductible as real estate taxes.
Charges for services.
An itemized charge for services to specific property or people is not a tax, even if the charge is paid to the taxing authority. You cannot deduct
the charge as a real estate tax if it is:
A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use),
A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged for trash collection), or
A flat fee charged for a single service provided by your local government (such as a $30 charge for mowing your lawn because it had grown
higher than permitted under a local ordinance).
You must look at your real estate tax bill to decide if any nondeductible itemized charges, such as those listed above, are included in the bill.
If your taxing authority (or lender) does not furnish you a copy of your real estate tax bill, ask for it.
Assessments for local benefits.Assessments:For local benefitsLocal benefits, assessments for
You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Local benefits include the construction of
streets, sidewalks, or water and sewer systems. You must add these amounts to the basis of your property.
You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those
benefits. An example is a charge to repair an existing sidewalk and any interest included in that charge.
If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the
deduction. If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it.
An assessment for a local benefit may be listed as an item in your real estate tax bill. If so, use the rules in this section to find how much of
it, if any, you can deduct.
Transfer taxes (or stamp taxes).Transfer taxesStamp taxes
You cannot deduct transfer taxes and similar taxes and charges on the sale of a personal home. If you are the buyer and you pay them, include them
in the cost basis of the property. If you are the seller and you pay them, they are expenses of the sale and reduce the amount realized on the sale.
Homeowners association assessments.Assessments:Homeowners associationHomeowners association assessments
You cannot deduct these assessments because the homeowners association, rather than a state or local government, imposes them.
Special Rules for CooperativesCooperatives
If you own a cooperative apartment, some special rules apply to you, though you generally receive the same tax treatment as other homeowners. As an
owner of a cooperative apartment, you own shares of stock in a corporation that owns or leases housing facilities. You can deduct your share of the
corporation's deductible real estate taxes if the cooperative housing corporation meets all of the following conditions.
The corporation has only one class of stock outstanding.
Each stockholder, solely because of ownership of the stock, can live in a house, apartment, or house trailer owned or leased by the
corporation.
No stockholder can receive any distribution out of capital, except on a partial or complete liquidation of the corporation.
The tenant-stockholders pay at least 80% of the corporation's gross income for the tax year. For this purpose, gross income means all income
received during the entire tax year, including any received before the corporation changed to cooperative ownership.
Tenant-stockholders.
A tenant-stockholder can be any entity (such as a corporation, trust, estate, partnership, or association) as well as an individual. The
tenant-stockholder does not have to live in any of the cooperative's dwelling units. The units that the tenant-stockholder has the right to occupy can
be rented to others.
Deductible taxes.
You figure your share of real estate taxes in the following way.
Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the
corporation.
Multiply the corporation's deductible real estate taxes by the number you figured in (1). This is your share of the real estate taxes.
Generally, the corporation will tell you your share of its real estate tax. This is the amount you can deduct if it reasonably reflects the cost of
real estate taxes for your dwelling unit.
Refund of real estate taxes.
If the corporation receives a refund of real estate taxes it paid in an earlier year, it must reduce the amount of real estate taxes paid this year
when it allocates the tax expense to you. Your deduction for real estate taxes the corporation paid this year is reduced by your share of the refund
the corporation received.
Generally, you can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule
A (Form 1040). Deductible sales taxes may include sales taxes paid on your home (including mobile and prefabricated), or home building materials if
the tax rate was the same as the general sales tax rate. For information on figuring your deduction, see the Instructions for Schedule A (Form 1040).
If you elect to deduct the sales taxes paid on your home, or home building materials, you cannot include them as part of your cost basis in the
home.
Home Mortgage InterestHome:Mortgage interestInterest:Home mortgage
This section of the publication gives you basic information about home mortgage interest, including information on interest paid at settlement,
points, and Form 1098, Mortgage Interest Statement.
Most home buyers take out a mortgage (loan) to buy their home. They then make monthly payments to either the mortgage holder or someone collecting
the payments for the mortgage holder. (See Your house payment, earlier, under What You Can and Cannot Deduct.)
Usually, you can deduct the entire part of your payment that is for mortgage interest, if you itemize your deductions on Schedule A (Form 1040).
However, your deduction may be limited if:
Your total mortgage balance is more than $1 million ($500,000 if married filing separately), or
You took out a mortgage for reasons other than to buy, build, or improve your home.
If either of these situations applies to you, you will need to get Publication 936. You also may need Publication 936 if you later refinance
your mortgage or buy a second home.
Refund of home mortgage interest.Mortgage interest:RefundRefund of:Mortgage interest
If you receive a refund of home mortgage interest that you deducted in an earlier year and that reduced your tax, you generally must include the
refund in income in the year you receive it. For more information, see Recoveries in Publication 525. The amount of the refund will usually
be shown on the mortgage interest statement you receive from your mortgage lender. See Mortgage Interest Statement, later.
To be deductible, the interest you pay must be on a loan secured by your main home or a second home. The loan can be a first or second mortgage, a
home improvement loan, or a home equity loan.
Prepaid interest.Prepaid interestInterest:Prepaid
If you pay interest in advance for a period that goes beyond the end of the tax year, you must spread this interest over the tax years to which it
applies. You can deduct in each year only the interest that qualifies as home mortgage interest for that year. However, there is an exception that
applies to points, discussed later.
Late payment charge on mortgage payment.Mortgage interest:Late payment chargeLate payment charge
You can deduct as home mortgage interest a late payment charge if it was not for a specific service in connection with your mortgage loan.
If you pay off your home mortgage early, you may have to pay a penalty. You can deduct that penalty as home mortgage interest provided the penalty
is not for a specific service performed or cost incurred in connection with your mortgage loan.
Ground rent.Ground rent
In some states (such as Maryland), you may buy your home subject to a ground rent. A ground rent is an obligation you assume to pay a fixed amount
per year on the property. Under this arrangement, you are leasing (rather than buying) the land on which your home is located.
Redeemable ground rents.
If you make annual or periodic rental payments on a redeemable ground rent, you can deduct the payments as mortgage interest. The ground rent is a
redeemable ground rent only if all of the following are true.
Your lease, including renewal periods, is for more than 15 years.
You can freely assign the lease.
You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a
specified amount.
The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is
entitled.
Payments made to end the lease and buy the lessor's entire interest in the land are not redeemable ground rents. You cannot deduct them.
Nonredeemable ground rents.
Payments on a nonredeemable ground rent are not mortgage interest. You can deduct them as rent only if they are a business expense or if they are
for rental property.
Cooperative apartment.Cooperatives
You can usually treat the interest on a loan you took out to buy stock in a cooperative housing corporation as home mortgage interest if you own a
cooperative apartment and the cooperative housing corporation meets the conditions described earlier under Special Rules for Cooperatives.
In addition, you can treat as home mortgage interest your share of the corporation's deductible mortgage interest. Figure your share of mortgage
interest the same way that is shown for figuring your share of real estate taxes in the Example under Division of real estate
taxes. For more information on cooperatives, see Special Rule for Tenant-Stockholders in Cooperative Housing Corporations in
Publication 936.
Refund of cooperative's mortgage interest.
You must reduce your mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. The
patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest it paid in a prior year.
If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct.
Figure A. Are My Points Fully Deductible This Year?Summary: This flowchart is used to determine if mortgage points are fully deductible for the current tax year.StartThis is the starting of the flowchart.Decision (1)Is the loan secured by your main home?IF Yes Continue To Decision (2)IF No Continue To Process (a)Decision (2)Is the payment of points an established business practice in your area?IF Yes Continue To Decision (3)IF No Continue To Process (a)Decision (3)Were the points paid more than the amount generally charged in your area?IF Yes Continue To Process (a)IF No Continue To Decision (4)Decision (4)Do you use the cash method of accounting?IF Yes Continue To Decision (5)IF No Continue To Process (a)Decision (5)Were the points paid in place of amounts that ordinarily are separately stated on the settlement sheet?IF Yes Continue To Process (a)IF No Continue To Decision (6)Decision (6)Were the funds you provided (other than those you borrowed from your lender or mortgage broker), plus any points the seller paid, at least as
much as the points charged?Footnote: The funds you provided do not have to have been applied to the points. They can include a down payment, an escrow deposit, earnest
money, and other funds you paid at or before closing for any purpose.IF Yes Continue To Decision (7)IF No Continue To Process (a)Decision (7)Did you take out the loan to improve your main home?IF Yes Continue To Process (b)IF No Continue To Decision (8)Decision (8)Did you take out the loan to buy or build your main home?IF Yes Continue To Decision (9)IF No Continue To Process (a)Decision (9)Were the points computed as a percentage of the principal amount of the mortgage?IF Yes Continue To Decision (10)IF No Continue To Process (a)Decision (10)Is the amount paid clearly shown as points on the settlement statement?IF Yes Continue To Process (b)IF No Continue To Process (a)Process (a)You cannot fully deduct the points this year. See the discussion on Points.Continue To EndProcess (b)You can fully deduct the points this year.Continue To EndEndThis is the ending of the flowchart.
Mortgage Interest Paid
at SettlementMortgage interest:Paid at settlementSettlement or closing costs:Mortgage interest
One item that normally appears on a settlement or closing statement is home mortgage interest.
You can deduct the interest that you pay at settlement if you itemize your deductions on Schedule A (Form 1040). This amount should be included in
the mortgage interest statement provided by your lender. See the discussion under Mortgage Interest Statement, later. Also, if you pay
interest in advance, see Prepaid interest, earlier, and Points, next.
PointsPoints
The term points is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points also may be
called loan origination fees, maximum loan charges, loan discount, or discount points.
A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. See Points paid by the seller, later.
General rule.
You cannot deduct the full amount of points in the year paid. They are prepaid interest, so you generally must deduct them over the life (term) of
the mortgage.
Exception.
You can deduct the full amount of points in the year paid if you meet all the following tests.
Your loan is secured by your main home. (Generally, your main home is the one you live in most of the time.)
Paying points is an established business practice in the area where the loan was made.
The points paid were not more than the points generally charged in that area.
You use the cash method of accounting. This means you report income in the year you receive it and deduct expenses in the year you pay them.
Most individuals use this method.
The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees,
inspection fees, title fees, attorney fees, and property taxes.
The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. The funds you
provided do not have to have been applied to the points. They can include a down payment, an escrow deposit, earnest money, and other funds you paid
at or before closing for any purpose. You cannot have borrowed these funds from your lender or mortgage broker.
You use your loan to buy or build your main home.
The points were computed as a percentage of the principal amount of the mortgage.
The amount is clearly shown on the settlement statement (such as the Uniform Settlement Statement, Form HUD-1) as points charged for the
mortgage. The points may be shown as paid from either your funds or the seller's.
Note.
If you meet all of the tests listed above and you itemize your deductions in the year you get the loan, you can either deduct the full amount of
points in the year paid or deduct them over the life of the loan, beginning in the year you get the loan. If you do not itemize your deductions in the
year you get the loan, you can spread the points over the life of the loan and deduct the appropriate amount in each future year, if any, when you do
itemize your deductions.
Home improvement loan.
You can also fully deduct in the year paid points paid on a loan to improve your main home, if you meet the first six tests listed earlier.
Refinanced loan.
If you use part of the refinanced mortgage proceeds to improve your main home and you meet the first six tests listed earlier, you can fully deduct
the part of the points related to the improvement in the year you paid them with your own funds. You can deduct the rest of the points over the life
of the loan.
Points not fully deductible in year paid.
If you do not qualify under the exception to deduct the full amount of points in the year paid (or choose not to do so), see Points in
chapter 5 of Publication 535, Business Expenses, for the rules on when and how much you can deduct.
Figure A.
You can use Figure A as a quick guide to see whether your points are fully deductible in the year paid.
Amounts charged for services.
Amounts charged by the lender for specific services connected to the loan are not interest. Examples of these charges are:
Appraisal fees,
Notary fees,
Preparation costs for the mortgage note or deed of trust,
Mortgage insurance premiums, and
VA funding fees.
You cannot deduct these amounts as points either in the year paid or over the life of the mortgage. For information about the tax treatment of
these amounts and other settlement fees and closing costs, see Basis, later.
Points paid by the seller.
The term points includes loan placement fees that the seller pays to the lender to arrange financing for the buyer.
Treatment by seller.
The seller cannot deduct these fees as interest; but, they are a selling expense that reduces the seller's amount realized. See Publication 523 for
more information.
Treatment by buyer.
The buyer treats seller-paid points as if he or she had paid them. If all the tests under Exception (discussed earlier) are met, the
buyer can deduct the points in the year paid. If any of those tests are not met, the buyer must deduct the points over the life of the loan.
The buyer must also reduce the basis of the home by the amount of the seller-paid points. For more information about the basis of your home, see
Basis, later.
Funds provided are less than points.
If you meet all the tests under Exception (discussed earlier) except that the funds you provided were less than the points charged to
you (test 6), you can deduct the points in the year paid up to the amount of funds you provided. In addition, you can deduct any points paid by the
seller.
Example 1.
When you took out a $100,000 mortgage loan to buy your home in December, you were charged one point ($1,000). You meet all the tests for deducting
points in the year paid (see Exception), except the only funds you provided were a $750 down payment. Of the $1,000 you were charged for
points, you can deduct $750 in the year paid. You spread the remaining $250 over the life of the mortgage.
Example 2.
The facts are the same as in Example 1, except that the person who sold you your home also paid one point ($1,000) to help you get your
mortgage. In the year paid, you can deduct $1,750 ($750 of the amount you were charged plus the $1,000 paid by the seller). You spread the remaining
$250 over the life of the mortgage. You must reduce the basis of your home by the $1,000 paid by the seller.
Excess points.
If you meet all the tests under Exception except that the points paid were more than are generally charged in your area (test 3), you
can deduct in the year paid only the points that are generally charged. You must spread any additional points over the life of the mortgage.
Mortgage ending early.
If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. A
mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event.
Example.
Dan paid $3,000 in points in 1998 that he had to spread out over the 15-year life of the mortgage. He had deducted $1,400 of these points through
2004.
Dan prepaid his mortgage in full in 2005. He can deduct the remaining $1,600 of points in 2005.
Exception.
If you refinance the mortgage with the same lender, you cannot deduct any remaining points for the year. Instead, deduct them over the term of the
new loan.
Form 1098.
The mortgage interest statement you receive should show not only the total interest paid during the year, but also your deductible points paid
during the year. See Mortgage Interest Statement, later.
Where To Deduct
Home Mortgage Interest
Enter on Schedule A (Form 1040), line 10, the home mortgage interest and points reported to you on Form 1098 (discussed next). If you did not
receive a Form 1098, enter your deductible interest on line 11, and any deductible points on line 12. See Table 1 for a summary of where to
deduct home mortgage interest and real estate taxes.
If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and social security number (SSN)
or employer identification number (EIN) on the dotted lines next to line 11. The seller must give you this number and you must give the seller your
SSN. Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Failure to meet either of these
requirements may result in a $50 penalty for each failure.
If you paid $600 or more of mortgage interest (including certain points) during the year on any one mortgage to a mortgage holder in the course of
that holder's trade or business, you should receive a Form 1098 or similar statement from the mortgage holder. The statement will show the total
interest paid on your mortgage during the year. If you bought a main home during the year, it also will show the deductible points you paid and any
points you can deduct that were paid by the person who sold you your home. See Points, earlier.
The interest you paid at settlement should be included on the statement. If it is not, add the interest from the settlement sheet that qualifies as
home mortgage interest to the total shown on Form 1098 or similar statement. Put the total on Schedule A (Form 1040), line 10, and attach a statement
to your return explaining the difference. Write See attached to the right of line 10.
A mortgage holder can be a financial institution, a governmental unit, or a cooperative housing corporation. If a statement comes from a
cooperative housing corporation, it generally will show your share of interest.
Your mortgage interest statement for 2005 should be sent to you by January 31, 2006. A copy of this form will be sent to the IRS also.
Example.
You bought a new home on May 3. You paid no points on the purchase. During the year, you made mortgage payments which included $4,480 deductible
interest on your new home. The settlement sheet for the purchase of the home included interest of $620 for 29 days in May. The mortgage statement you
receive from the lender includes total interest of $5,100 ($4,480 + $620). You can deduct the $5,100 if you itemize your deductions.
Refund of overpaid interest.Mortgage interest:RefundRefund of:Mortgage interest
If you receive a refund of mortgage interest you overpaid in a prior year, you generally will receive a Form 1098 showing the refund in box 3.
Generally, you must include the refund in income in the year you receive it. See Refund of home mortgage interest, earlier, under Home
Mortgage Interest.
More than one borrower.
If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was
for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return
explaining this. Show how much of the interest each of you paid, and give the name and address of the person who received the form. Deduct your share
of the interest on Schedule A (Form 1040), line 11, and write See attached to the right of that line.
The mortgage interest credit is intended to help lower-income individuals afford home ownership. If you qualify, you can claim the credit each year
for part of the home mortgage interest you pay.
Who qualifies.
You may be eligible for the credit if you were issued a mortgage credit certificate (MCC)
Certificate, mortgage creditMCC (Mortgage credit certificate)Mortgage credit certificate (MCC)from your state or local government. Generally, an MCC is issued only in connection with a new
mortgage for the purchase of your main home.
The MCC will show the certificate credit rate you will use to figure your credit. It also will show the certified indebtedness amount. Only the
interest on that amount qualifies for the credit. See Figuring the Credit, later.
<ROM>Table 1.</ROM>
<IMARK> Where To Deduct Interest and Taxes Paid on Your HomeSee the text for information on what expenses are eligible.IF you are eligible to deduct . . .THEN report the amount
on Schedule A (Form 1040) . . .Real estate taxes line 6Home mortgage interest and points reported on Form 1098line 10Home mortgage interest not reported on Form 1098line 11Points not reported on
Form 1098line 12
You must contact the appropriate government agency about getting an MCC before you get a mortgage and buy your home. Contact your state or local
housing finance agency for information about the availability of MCCs in your area.
How to claim the credit.Form:8396
To claim the credit, complete Form 8396 and attach it to your Form 1040. Include the credit in your total for Form 1040, line 54; be sure to check
box a on that line.
Reducing your home mortgage interest deduction.
If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage
interest credit shown on Form 8396, line 3. You must do this even if part of that amount is to be carried forward to 2006.
Selling your home.
If you purchase a home after 1990 using an MCC, and you sell that home within 9 years, you may have to recapture (repay) all or part of the benefit
you received from the MCC program. For additional information, see Recapturing (Paying Back) a Federal Mortgage Subsidy, in Publication
523.
Figuring the CreditForm:8396
Figure your credit on Form 8396.
Mortgage not more than certified indebtedness.
If your mortgage loan amount is equal to (or smaller than) the certified indebtedness amount shown on your MCC, enter on Form 8396, line 1, all the
interest you paid on your mortgage during the year.
Mortgage more than certified indebtedness.
If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the
interest you paid. To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following
fraction.
Certified indebtedness amount on your MCCOriginal amount of your mortgage
The fraction will not change as long as you are entitled to take the mortgage interest credit.
Example.
Emily bought a home this year. Her mortgage loan is $125,000. The certified indebtedness amount on her MCC is $100,000. She paid $7,500 interest
this year. Emily figures the interest to enter on Form 8396, line 1, as follows:
$100,000 $125,000=80%(.80)$7,500x.80=$6,000
Emily enters $6,000 on Form 8396, line 1. In each later year, she will figure her credit using only 80% of the interest she pays
for that year.
Limits
Two limits may apply to your credit.
A limit based on the credit rate, and
A limit based on your tax.
Limit based on credit rate.
If the certificate credit rate is higher than 20%, the credit you are allowed cannot be more than $2,000.
Limit based on tax.
Your credit (after applying the limit based on the credit rate) generally cannot be more than your regular tax liability on Form 1040, line 44,
plus any alternative minimum tax on Form 1040, line 45, minus certain other credits. Use Form 8396 to figure this limit.
Dividing the Credit
If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, the credit must
be divided based on the interest held by each person.
Example.
John and his brother, George, were issued an MCC. They used it to get a mortgage on their main home. John has a 60% ownership interest in the home,
and George has a 40% ownership interest in the home. John paid $5,400 mortgage interest this year and George paid $3,600.
The MCC shows a credit rate of 25% and a certified indebtedness amount of $130,000. The loan amount (mortgage) on their home is $120,000. The
credit is limited to $2,000 because the credit rate is more than 20%.
John figures the credit by multiplying the mortgage interest he paid this year ($5,400) by the certificate credit rate (25%) for a total of $1,350.
His credit is limited to $1,200 ($2,000 × 60%).
George figures the credit by multiplying the mortgage interest he paid this year ($3,600) by the certificate credit rate (25%) for a total of $900.
His credit is limited to $800 ($2,000 × 40%).
<ROM>Table 2.</ROM> Effect of Refinancing on Your CreditIF you get a new (reissued) MCC and the amount of your new mortgage is ...THEN the interest you claim on Form 8396, line 1, is
* ...`Smaller than or equal to the certified indebtedness amount on the new MCCAll the interest paid during the year on your new mortgage.Larger than the certified indebtedness amount on the new MCCInterest paid during the year on your new mortgage multiplied by the following fraction.Certified indebtedness
amount on your new MCCOriginal amount of your
mortgage
*The credit using the new MCC cannot be more than the credit using the old MCC.
See New MCC cannot increase your credit.
Carryforward
If your allowable credit is reduced because of the limit based on your tax, you can carry forward the unused portion of the credit to the next 3
years or until used, whichever comes first.
Example.
You receive a mortgage credit certificate from State X. This year, your regular tax liability is $1,100, you owe no alternative minimum tax, and
your mortgage interest credit is $1,700. You claim no other credits. Your unused mortgage interest credit for this year is $600 ($1,700 −
$1,100). You can carry forward this amount to the next 3 years or until used, whichever comes first.
Credit rate more than 20%.
If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000
(or your share of the $2,000 if you must divide the credit).
Example.
In the earlier example under Dividing the Credit, John and George used the entire $2,000 credit. The excess $150 for John ($1,350
− $1,200) and $100 for George ($900 − $800) cannot be carried forward to future years, despite the respective tax liabilities for John and
George.
Refinancing
If you refinance your original mortgage loan on which you had been given an MCC, you must get a new MCC to be able to claim the credit on the new
loan. The amount of credit you can claim on the new loan may change. Table 2 summarizes how to figure your credit if you refinance your original
mortgage loan.
An issuer may reissue an MCC after you refinance your mortgage. If you did not get a new MCC, you may want to contact the state or local housing
finance agency that issued your original MCC for information about whether you can get a reissued MCC.
Year of refinancing.
In the year of refinancing, add the applicable amount of interest paid on the old mortgage and the applicable amount of interest paid on the new
mortgage, and enter the total on Form 8396, line 1.
If your new MCC has a credit rate different from the rate on the old MCC, you must attach a statement to Form 8396. The statement must show the
calculation for lines 1, 2, and 3 for the part of the year when the old MCC was in effect. It must show a separate calculation for the part of the
year when the new MCC was in effect. Combine the amounts from both calculations for line 3, enter the total on line 3 of the form, and write see
attached on the dotted line.
New MCC cannot increase your credit.
The credit that you claim with your new MCC cannot be more than the credit that you could have claimed with your old MCC.
In most cases, the agency that issues your new MCC will make sure that it does not increase your credit. However, if either your old loan or your
new loan has a variable (adjustable) interest rate, you will need to check this yourself. In that case, you will need to know the amount of the credit
you could have claimed using the old MCC.
There are two methods for figuring the credit you could have claimed. Under one method, you figure the actual credit that would have been allowed.
This means you use the credit rate on the old MCC and the interest you would have paid on the old loan.
If your old loan was a variable rate mortgage, you can use another method to determine the credit that you could have claimed. Under this method,
you figure the credit using a payment schedule of a hypothetical self-amortizing mortgage with level payments projected to the final maturity date of
the old mortgage. The interest rate of the hypothetical mortgage is the annual percentage rate (APR) of the new mortgage for purposes of the Federal
Truth in Lending Act. The principal of the hypothetical mortgage is the remaining outstanding balance of the certified mortgage indebtedness shown on
the old MCC.
You must choose one method and use it consistently beginning with the first tax year for which you claim the credit based on the new MCC.
As part of your tax records, you should keep your old MCC and the schedule of payments for your old mortgage.
BasisBasis
Basis is your starting point for figuring a gain or loss if you later sell your home, or for figuring depreciation if you later use part of your
home for business purposes or for rent.
While you own your home, you may add certain items to your basis. You may subtract certain other items from your basis. These items are called
adjustments to basis and are explained later under Adjusted Basis.
It is important that you understand these terms when you first acquire your home because you must keep track of your basis and adjusted basis
during the period you own your home. You also must keep records of the events that affect basis or adjusted basis. See Keeping Records,
later.
Figuring Your Basis
How you figure your basis depends on how you acquire your home. If you buy or build your home, your cost is your basis. If you receive your home as
a gift, your basis is usually the same as the adjusted basis of the person who gave you the property. If you inherit your home from a decedent, the
fair market value at the date of the decedent's death is generally your basis. Each of these topics is discussed later.
Fair market value.
This is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or
sell and who both have a reasonable knowledge of all the necessary facts.
Property transferred from a spouse.
If your home is transferred to you from your spouse, or from your former spouse as a result of a divorce, your basis is the same as your spouse's
(or former spouse's) adjusted basis just before the transfer. Publication 504, Divorced or Separated Individuals, fully discusses transfers between
spouses.
Cost as BasisCost basis
The cost of your home, whether you purchased it or constructed it, is the amount you paid for it, including any debt you assumed.
The cost of your home includes most settlement or closing costs you paid when you bought the home. If you built your home, your cost includes most
closing costs paid when you bought the land or settled on your mortgage.
If you elect to deduct the sales taxes on the purchase or construction of your home as an itemized deduction on Schedule A (Form 1040), you cannot
include the sales taxes as part of your cost basis in the home.
Purchase.Home:Purchase of
The basis of a home you bought is the amount you paid for it. This usually includes your down payment and any debt you assumed. The basis of a
cooperative apartment is the amount you paid for your shares in the corporation that owns or controls the property. This amount includes any purchase
commissions or other costs of acquiring the shares.
Construction.Construction
If you contracted to have your home built on land that you own, your basis in the home is your basis in the land plus the amount you paid to have
the home built. This includes the cost of labor and materials, the amount you paid the contractor, any architect's fees, building permit charges,
utility meter and connection charges, and legal fees that are directly connected with building your home. If you built all or part of your home
yourself, your basis is the total amount it cost you to build it. You cannot include the value of your own labor or any other labor for which you did
not pay.
Real estate taxes.Real estate taxes:Paid at settlement or closingSettlement or closing costs:Real estate taxes
Real estate taxes are usually divided so that you and the seller each pay taxes for the part of the property tax year that each owned the home. See
the earlier discussion of Real estate taxes paid at settlement or closing, under Real Estate Taxes, to figure the real estate
taxes you paid or are considered to have paid.
If you pay any part of the seller's share of the real estate taxes (the taxes up to the date of sale), and the seller did not reimburse you, add
those taxes to your basis in the home. You cannot deduct them as taxes paid.
If the seller paid any of your share of the real estate taxes (the taxes beginning with the date of sale), you can still deduct those taxes. Do not
include those taxes in your basis. If you did not reimburse the seller, you must reduce your basis by the amount of those taxes.
<ROM>Table 3.</ROM>
<IMARK>Adjusted BasisThis table lists examples of some items that generally will increase or decrease your basis in your home. It is not intended to be
all-inclusive.Increases to BasisDecreases to BasisImprovements:
Putting an addition on your home
Replacing an entire roof
Paving your driveway
Installing central air conditioning
Rewiring your home
Assessments for local improvements
(see Assessments for local benefits, under What You Can and Cannot Deduct)
Amounts spent to restore damaged property
Insurance or other reimbursement for casualty losses
Deductible casualty loss not covered by insurance
Payments received for easement or right-of-way granted
Depreciation allowed or allowable if home is used for business or rental purposes
Value of subsidy for energy conservation measure excluded from income
Example 1.
You bought your home on September 1. The property tax year in your area is the calendar year, and the tax is due on August 15. The real estate
taxes on the home you bought were $1,275 for the year and had been paid by the seller on August 15. You did not reimburse the seller for your share of
the real estate taxes from September 1 through December 31. You must reduce the basis of your home by the $426 [(122 ÷ 365) × $1,275] the
seller paid for you. You can deduct your $426 share of real estate taxes on your return for the year you purchased your home.
Example 2.
You bought your home on May 3, 2005. The property tax year in your area is the calendar year. The taxes for the previous year are assessed on
January 2 and are due on May 31 and November 30. Under state law, the taxes become a lien on May 31. You agreed to pay all taxes due after the date of
sale. The taxes due in 2005 for 2004 were $1,375. The taxes due in 2006 for 2005 will be $1,425.
You cannot deduct any of the taxes paid in 2005 because they relate to the 2004 property tax year and you did not own the home until 2005. Instead,
you add the $1,375 to the cost (basis) of your home.
You owned the home in 2005 for 243 days (May 3 to December 31), so you can take a tax deduction on your 2006 return of $949 [(243 ÷ 365)
× $1,425] paid in 2006 for 2005. You add the remaining $476 ($1,425 − $949) of taxes paid in 2006 to the cost (basis) of your home.
Settlement or closing costs.Settlement or closing costs:Basis of home
If you bought your home, you probably paid settlement or closing costs in addition to the contract price. These costs are divided between you and
the seller according to the sales contract, local custom, or understanding of the parties. If you built your home, you probably paid these costs when
you bought the land or settled on your mortgage.
The only settlement or closing costs you can deduct are home mortgage interest and certain real estate taxes. You deduct them in the year you buy
your home if you itemize your deductions. You can add certain other settlement or closing costs to the basis of your home.
Items added to basis.
You can include in your basis the settlement fees and closing costs you paid for buying your home. A fee is for buying the home if you would have
had to pay it even if you paid cash for the home.
The following are some of the settlement fees and closing costs that you can include in the original basis of your home.
Abstract fees (abstract of title fees).
Charges for installing utility services.
Legal fees (including fees for the title search and preparation of the sales contract and deed).
Recording fees.
Surveys.
Transfer taxes.
Owner's title insurance.
Any amount the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, cost for improvements or
repairs, and sales commissions.
If the seller actually paid for any item for which you are liable and for which you can take a deduction (such as your share of the real estate
taxes for the year of sale), you must reduce your basis by that amount unless you are charged for it in the settlement.
Items not added to basis and not deductible.Nondeductible payments
Here are some settlement and closing costs that you cannot deduct or add to your basis.
Fire insurance premiums.
Fire insurance premiumsInsurance
Charges for using utilities or other services related to occupancy of the home before closing.
Rent for occupying the home before closing.
Charges connected with getting or refinancing a mortgage loan, such as:
FHA or other mortgage insurance premiums and VA funding fees,
VA funding feesMortgage insurance premiums
Loan assumption fees,
Cost of a credit report, and
Fee for an appraisal required by a lender.
Points paid by seller.
If you bought your home after April 3, 1994, you must reduce your basis by any points paid for your mortgage by the person who sold you your home.
If you bought your home after 1990 but before April 4, 1994, you must reduce your basis by seller-paid points only if you deducted them. See
Points, earlier, for the rules on deducting points.
GiftGift of homeHome:Received as gift
To figure the basis of property you receive as a gift, you must know its adjusted basis (defined later) to the donor just before it was given to
you, its FMV at the time it was given to you, and any gift tax paid on it.
Donor's adjusted basis is more than FMV.
If someone gave you your home and the donor's adjusted basis, when it was given to you, was more than the fair market value, your basis at the time
of receipt is the same as the donor's adjusted basis.
Disposition basis.
If the donor's adjusted basis at the time of the gift is more than the FMV, your basis when you dispose of the property will depend on whether you
have a gain or a loss.
If using the donor's adjusted basis results in a loss when you sell the home, you must use the fair market value of the home at the time of
the gift as your basis.
If using the fair market value results in a gain, you have neither a gain nor a loss.
Donor's adjusted basis equal to or less than the FMV.
If someone gave you your home after 1976 and the donor's adjusted basis, when it was given to you, was equal to or less than the fair market value,
your basis at the time of receipt is the same as the donor's adjusted basis, plus the part of any federal gift tax paid that is due to the net
increase in value of the home.
Part of federal gift tax due to net increase in value.
Figure the part of the federal gift tax paid that is due to the net increase in value of the home by multiplying the total federal gift tax paid by
a fraction. The numerator (top part) of the fraction is the net increase in the value of the home, and the denominator (bottom part) is the value of
the home for gift tax purposes after reduction for any annual exclusion and marital or charitable deduction that applies to the gift. The net increase
in the value of the home is its fair market value minus the adjusted basis of the donor.
Publication 551 gives more information, including examples, on figuring your basis when you receive property as a gift.
InheritanceInheritanceHome:Inherited
Your basis in a home you inherited is generally the fair market value of the home on the date of the decedent's death or on the alternate valuation
date if the personal representative for the estate chooses to use alternative valuation.
If an estate tax return was filed, your basis is generally the value of the home listed on the estate tax return.
If an estate tax return was not filed, your basis is the appraised value of the home at the decedent's date of death for state inheritance or
transmission taxes. Publication 551 and Publication 559, Survivors, Executors, and Administrators, have more information on the basis of inherited
property.
Adjusted BasisAdjusted basis
While you own your home, various events may take place that can change the original basis of your home. These events can increase or decrease your
original basis. The result is called adjusted basis. See Table 3, earlier, for a list of some of the items that can adjust your basis.
Improvements.Improvements
An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. You must add the cost of
any improvements to the basis of your home. You cannot deduct these costs.
Improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new
plumbing or wiring, installing a new roof, and paving your driveway.
Amount added to basis.
The amount you add to your basis for improvements is your actual cost. This includes all costs for material and labor, except your own labor, and
all expenses related to the improvement. For example, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of
the fence.
You also must add to your basis state and local assessments for improvements such as streets and sidewalks if they increase the value of the
property. These assessments are discussed earlier under Real Estate Taxes.
Repairs versus improvements.Repairs
A repair keeps your home in an ordinary, efficient operating condition. It does not add to the value of your home or prolong its life. Repairs
include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. You
cannot deduct repair costs and generally cannot add them to the basis of your home.
However, repairs that are done as part of an extensive remodeling or restoration of your home are considered improvements. You add them to the
basis of your home.
Records to keep.
You can use Table 4 (at the end of the publication) as a guide to help you keep track of improvements to your home. Also see Keeping Records,
later.
Energy conservation subsidy.
If a public utility gives you (directly or indirectly) a subsidy for the purchase or installation of an energy conservation measure for your home,
do not include the value of that subsidy in your income. You must reduce the basis of your home by that value.
An energy conservation measure is an installation or modification primarily designed to reduce consumption of electricity or natural gas or to
improve the management of energy demand.
Keeping RecordsKeeping recordsRecordkeeping
Keeping full and accurate records is vital to properly report your income and expenses, to support your deductions and credits, and to know the
basis or adjusted basis of your home. These records include your purchase contract and settlement papers if you bought the property, or other
objective evidence if you acquired it by gift, inheritance, or similar means. You should keep any receipts, canceled checks, and similar evidence for
improvements or other additions to the basis. In addition, you should keep track of any decreases to the basis such as those listed in Table 3.
How to keep records.
How you keep records is up to you, but they must be clear and accurate and must be available to the IRS.
How long to keep records.
You must keep your records for as long as they are important for meeting any provision of the federal tax law.
Keep records that support an item of income, a deduction, or a credit, appearing on a return until the period of limitations for the return runs
out. (A period of limitations is the period of time after which no legal action can be brought.) For assessment of tax you owe, this is generally 3
years from the date you filed the return. For filing a claim for credit or refund, this is generally 3 years from the date you filed the original
return, or 2 years from the date you paid the tax, whichever is later. Returns filed before the due date are treated as filed on the due date.
You may need to keep records relating to the basis of property (discussed earlier) longer than for the period of limitations. Keep those records as
long as they are important in figuring the basis of the original or replacement property. Generally, this means for as long as you own the property
and, after you dispose of it, for the period of limitations that applies to you.
<ROM>Table 4.</ROM>
<IMARK> Record of Home ImprovementsKeep this for your records. Also, keep receipts or other proof of improvements. Remove from this record any improvements that are no longer part of your main home. For example, if you
put wall-to-wall carpeting in your home and later replace it with new wall-to-wall carpeting, remove the cost of the first carpeting.
(a)
Type of Improvement(b)
Date(c)
Amount(a)
Type of Improvement(b)
Date(c)
AmountAdditions:Heating & Air
Conditioning:BedroomHeating systemBathroomCentral air conditioningDeckFurnaceGarageDuct workPorchCentral humidifierPatioFiltration systemStorage shedOtherFireplaceElectrical:OtherLawn & Grounds:Lighting fixturesWiring upgradesLandscaping OtherDrivewayPlumbing:WalkwayFencesWater heaterRetaining wallSoft water systemSprinkler systemFiltration systemSwimming poolOtherExterior lightingInsulation:OtherCommunications:AtticWallsSatellite dishFloorsIntercomPipes and duct workSecurity systemOtherOtherMiscellaneous:Interior
Improvements:Storm windows and doorsBuilt-in appliancesRoofKitchen modernizationCentral vacuumBathroom modernizationOtherFlooringWall-to-wall carpetingOther
More informationTax helpFree tax servicesTax helpHelpTax helpAssistanceTax helpPublicationsTax helpTTY/TDD informationHow To Get Tax Help
You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several
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Contacting your Taxpayer Advocate.Taxpayer Advocate
If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate.
The Taxpayer Advocate independently represents your interests and concerns within the IRS by protecting your rights and resolving problems that
have not been fixed through normal channels. While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up
problems that resulted from previous contacts and ensure that your case is given a complete and impartial review.
To contact your Taxpayer Advocate:
Call the Taxpayer Advocate toll free at
1-877-777-4778.
Call, write, or fax the Taxpayer Advocate office in your area.
For more information, see Publication 1546, How To Get Help With Unresolved Tax Problems (now available in Chinese, Korean, Russian, and
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Free tax services.
To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. It contains a list of free tax publications and an
index of tax topics. It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax
topics.
Internet. You can access the IRS website 24 hours a day, 7 days a week, at
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E-file your return. Find out about commercial tax preparation and e-file services available free to eligible
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Check the status of your 2005 refund. Click on Where's My Refund. Be sure to wait at least 6 weeks from the date you filed your
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Ordering forms, instructions, and publications. Call 1-800-829-3676 to order current-year forms, instructions, and publications
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Tax Topics from the IRS telephone response system.
Fill-in, print, and save features for most tax forms.
Internal Revenue Bulletins.
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Buy the CD-ROM from National Technical Information Service (NTIS) at
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All the business tax forms, instructions, and publications needed to successfully manage a business.
Tax law changes for 2005.
IRS Tax Map to help you find forms, instructions, and publications by searching on a keyword or topic.
Web links to various government agencies, business associations, and IRS organizations.
Rate the Product survey—your opportunity to suggest changes for future editions.
An updated version of this CD is available each year in early April. You can get a free copy by calling 1-800-829-3676 or by visiting
www.irs.gov/smallbiz.
