Tax and financial advice from the Silicon Valley expert.

California stops accepting applications for first-time homebuyer credits but new homes credit still available

California has adopted tax credits for new home purchases and first-time homebuyers. The credits are available for qualified taxpayers who purchase a qualified residence on or after May 1, 2010 and before January 1, 2011. Since there are ceilings on the total credits available for all taxpayers, it will be wise to apply for them early.

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Tax help for rental property debt cancellation

According to Revenue Ruling 92-92 and page 3 of IRS Publication 4681, cancellation of debt attributable to passive activity expenditures, such as purchase of the rental property, is passive activity income. For a rental property, the debt cancellation income should be included on line 3 of Schedule E as "rental income" for the property.

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Tax and financial advice from the Silicon Valley expert.