Tuesday, January 7, 2014 - Article by: Prospect Financial Group, Inc. -
Congress failed to renew several important homeowner tax breaks that expired on December 31st. Congress had renewed them in the past and may still renew them in the future, but there is no guarantee. Some of the important tax breaks that homeowners may no longer be able to take advantage of include the private mortgage insurance deduction, the loan forgiveness deduction and the energy-efficient improvement deduction.
In the past, homeowners who are required to make a monthly private mortgage insurance payment have been able to deduct the amount they paid for private mortgage insurance from their taxes. Borrowers that purchase a new home with less than a 20 percent down payment are required to pay a monthly private mortgage insurance premium until they build at least 20 percent equity in the home. Future home buyers should keep this in mind if they were not planning on making a 20 percent down payment.
Another deduction that was not extended was the loan forgiveness deduction. The loan forgiveness deduction allowed borrowers to claim the difference from what was owed on a property and what was paid as taxable income when they underwent a short sale. Not being able to claim this can cause borrowers that underwent a short sale to owe thousands of dollars with their taxes.
With the energy efficient improvements deduction, borrowers were able to deduct the cost for any energy efficient improvements they made that year from their tax returns. Now, only major items such as solar water heaters, wind turbines and geothermal heat systems can deducted. Formally, homeowners could deduct items such as new doors and windows, insulation, furnaces, etc.
Luckily for homeowners, these tax breaks will still be available in April 2014 when they file their 2013 tax return.
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