News on the homebuyer tax credit.the House of Representatives has
approved legislation that would extend and expand the credit. The
House vote comes after the Senate voted yes on Monday night, and while there is more work to be done, word has it that an agreed upon bill should reach President Obama for his signature by the end of this
week.

Under the proposal, individuals with income up to $125,000 a year and
couples earning up to $225,000 would be eligible for the credit. The
extension would cover homes under contract by April 30th and closed by June 30th, 2010. And as we had also predicted, the tax credit will be expanded to non-first time homebuyers as well. There are a few tweaks for non-first time homebuyers – the credit is reduced from $8000 to $6500, and they must have owned a home for at least five of the past eight years. Remember – this is NOT final, and even if it is
approved, it could contain further changes.

The temporary incentives of the American Recovery and Reinvestment Act of 2009 are scheduled to expire at the end of 2009.  

Why you should buy equipment in 2009:

In 2009, the American Recovery and Reinvestment Act adds to the advantage by providing 50% bonus depreciation on eligible new 2009 equipment acquisitions.  This incentive substantially accelerates the normal tax depreciation benefit which results in increased economic benefits.  The type of property qualified for bonus depreciation is the same as that included in previous bonus depreciation packages (e.g., equipment, tractors, and computers). 

Increased Section 179 benefits endings soon

Depending on how much your company invests in capital expenditures during the year, for tax purposes you may qualify to expense the full cost (100%) of qualified capital assets (property and equipment) your company purchases in the year the assets are placed in service, within certain limits.  Last year, due to the Economic Stimulus Act of 2008, your business was allowed to expense a maximum of $250,000 with a phase-out threshold at $800,000 under Section 179.  This new stimulus legislation extends last year’s temporarily increased expensing limits through 2009.