IDAs are set up through nonprofit agencies. The government provides these agencies with grant money each year and the agency fundraises for additional monies. To apply and find out more information about IDAs contact your local office by using CFED’s directory. The program limits the number of applicants it can enroll each year. Call and ask if they are currently accepting account holders. Unlike HSBCâ€™s program, there is no grant at the end but depending on the IDA you apply for, you can get as much as $4 matched for every $1 you save.
These funds can be used in combination with other programs and funding sources, like the first time homebuyer tax credit, which has recently been extended. Under the new legislation, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010, and close on the home by June 30, 2010. Taxpayers can claim the credit by filling out a 5405 form on either their 2009 or 2010 return.
The tax credit is a great reward for buying a home, but you can also get repaid for being energy conscious. Hecht explained that new and existing homeowners can file for the Nonbusiness Energy Property Credit by filling out Form 5695 . This tax credit is for making energy efficient improvements to homes, such as adding insulation materials, energy-efficient exterior windows, high efficiency heat pumps, and air conditioning systems.
There is also a second tax credit designed to spur investment in alternative energy equipment. The Residential Efficiency Property Credit applies to improvements such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when calculating this credit. Check the manufacturerâ€™s tax credit certification statement to make sure it qualifies before purchasing or installing any of these improvements. These services must be installed after December 31, 2008 and before January 1, 2011. You must claim the credit on the tax return of the year that the improvements are made. You can also use Form 5695 to receive these credits.
You should plan to spend a few hours each day researching how many grants and tax incentives you qualify for. As you can see, there is plenty out there. Your hard research will pay off in the end.
Next week weâ€™ll move into the second half of the class: Repairing and Building Your Credit with a focus on money attitudes and budgeting. Follow me at www.twitter.com/LaToyaReports for daily updates.
Other posts in The Homebuyers Toolkit series:
LaToya M. Smith is an editorial assistant at Black Enterprise