March 1st, 2017 6:08 AM by Jackie A. Graves
Perhaps you didn’t realize it, but like the average house mouse,
or your driver’s registration, many tax breaks have a life span of only one
year. Technically, a lot of those tax credits and deductions expired on
Dec. 31, 2016—which means that if you’re a homeowner, you might want to
lock in whatever home-related tax benefits you can when you file last
Granted, it’s certainly possible these tax benefits could
be renewed for 2017, as they have been in past years. But with a new president
in office and plenty of changes afoot, who knows?
If you weren’t aware of these financial bonuses, you could save
a bundle by reading on. Here are some homeowner tax breaks to take now—before
it’s too late!
“One significant change to the tax code is that the mortgage
insurance deduction expired,” says Wendy Connick of Connick Financial Solutions.
Mortgage insurance is
what you pay your lender each month if you put down less than 20% on a home to
protect the lender in case you default. And given that mortgage insurance
typically costs 0.3% to 1.15% of your home loan, this can save you a pretty
penny—the premium you paid in 2016 can be deducted from your taxable income.
Keep in mind, however, that this deduction doesn’t apply to
any loan issued before Jan. 1, 2007, says Brian
Ashcraft, director of compliance at Liberty Tax Service. The
deduction also comes with limits. If your adjusted gross income is higher than
$100,000 ($50,000 for married individuals filing separately), the deduction is
reduced, and if your adjusted gross income exceeds $109,000 ($54,500, if
married filing separately), you don’t qualify for the deduction.
The Residential Energy Efficient Property credit lets you offset
what you owe the IRS, dollar for dollar, up to 10% of the amount you spent on
your qualified energy-efficiency upgrades.
So don’t miss out on this sweet little tax credit for any
“green” updates you made to your home last year, says Michael Banks, founder
This includes everything from a new HVAC system to
energy-efficient windows and storm doors. Since these credits expired at the
end of 2016, “if you don’t include them now, you won’t be able to claim them
On the downside, there’s a lifetime limit of $500 for this
credit. But on the bright side, the right improvement could lower your utility
When you go through a short sale, foreclosure, or loan modification, your
lender typically lets you off the hook for some or all of what you still owe on
The catch? That forgiven mortgage debt is usually seen as
income—and that means you have to pay income tax on it. For example, if your
lender agreed to let you short-sell your home for, say, $50,000 less than
you owed on the mortgage and forgave you for the balance, you’d owe income tax
on that $50,000.
the Mortgage Forgiveness Debt Relief Act, which expired at the end of 2016,
homeowners experiencing financial distress caught a break. No taxes
were levied on discharges of indebtedness for up to $2 million for married
taxpayers filing jointly and up to $1 million for a single or married taxpayer
filing a separate return.
By Margaret Heidenry - To view the
original article click here