Don't Mess With Taxes

The official song is My Old Kentucky Home, but the Bluegrass State is singing a special tax tune for residents who buy new houses.

Kentucky's New Home Tax Credit is available to eligible individuals who purchase a new primary residence between July 26, 2009, and July 25, 2010.

The tax nonrefundable credit, meaning it can zero out your Kentucky tax bill but it won't get you cash back if you have more credit than tax due, can be as much as $5,000.

The key word here is "new." This tax break is available only for folks who buy a new, previously unoccupied single-family dwelling. Once purchased, you have to live there for two years.

And in addition to the July-to-July time frame for the purchase, there's also a time consideration in applying for the credit.

You have to submit, via fax, an application form for the credit within seven days of closing. If you're approved, the Kentucky Department of Revenue will send you a credit allocation letter with a four-digit approval code. When you file your return in April, attach the letter to your return.

Interesting approach. The time limit plus dollar cap is sort of the tax department's answer to car warranties available up to a certain mileage limit or within a specific time frame, whichever comes first. It might be worth looking into, Uncle Sam. Just sayin'.

The latest info per Kentucky's Web site this afternoon (March 7) is that just over $4 million has been claimed, leaving almost $21 million for filers. The state says the last application it processed was on Thursday, March 4.

So it looks like there's still plenty of time and money for folks who want to trade in an old house for a new Kentucky home.

Tax trip around the United States: This post is part of our series highlighting tax information from the 50 U.S. states and Washington, D.C. You can read other state tax blurbs at our Complete menu of tasty state tax tidbits.

The State Tax Departments page provides links to official state and District of Columbia revenue Web sites so that you can find out more about your home's tax laws and filing requirements.

As we work through the 2010 tax season, a different state will be featured each day as noted in Don't forget your state taxes! Check back to see what tax tidbit we share about your home.

Related posts:

• House hunting? Check out tax credit
• State Tax Tidbits
• State Tax Departments
• Don't forget your state taxes!
• 9 states of no-tax note ... sort of

Want to tell your friends about this blog post? Click the Tweet This or Digg This buttons below or use the Share This icon to spread the word via e-mail, Facebook and other popular applications. Thanks!