It may be a bit soon in your book to start talking about taxes - but each year, some tax breaks for home buyers and sellers expire. While Congress could pass extensions for certain breaks, it might also be time for them to end.
Kali Hawlk writes to pay close attention to these deductions and write offs:
Mortgage debt forgiveness
Hawlk writes, “when a mortgage lender writes off any part of, or all of, a forgiven debt, the amount that is forgiven is passed back to the borrower as taxable for federal income tax purposes. The rule applies to all debt, including home mortgages. However, this rule was changed by Congress to help struggling homeowners during the Great Recession through the Mortgage Forgiveness Debt Relief Act. Under the rule, qualifying homeowners who either lost their homes to foreclosure or qualified for some kind of repayment adjustment didn’t have forgiven debt taxed as income. After being renewed several times in the past, the exception is due to expire at the end of 2016.”
Write off mortgage insurance premiums
Buyers financing houses recently found lenders required PMI to protect the lender in case the buyer defaulted. The ability to write off PMI changes. In 2014, Congress passed a bill that made some qualifying homeowners who itemized claim a tax deduction for the cost of paying the PMI for their homes, and even for vacation homes. This deduction once expires in January 2017.
Costs associated with energy-efficient upgrades toward your first or second home are eligible as write offs, up to 30% of the cost of electricity-generating systems, and you can claim up 10% to a total of $500 of eco-friendly energy-efficient improvement (heating and air, roofing doors, etc).