Homeowner tax breaks expire
Time to say goodbye to the deduction for private-mortgage-insurance premiums.
Homeowner alert: Several tax breaks that have been around for years expired at midnight on Dec. 31. While Congress has often renewed expired breaks retroactively, there's no guarantee that will happen with these.
Of the three key "temporary" breaks created during the financial crisis, the one that probably affects the largest number of homeowners is a deduction for private-mortgage-insurance premiums.
Private mortgage interest is generally charged to borrowers who put less than 20 percent down, to protect the lender in case of a default. Usually, it is just part of the monthly mortgage payment, so it can go unnoticed much of the time. But at an annual average of 0.5 percent of the loan amount, it can add up to many thousands of dollars over the years. Deducting it on the federal income tax return can trim that cost by 15 percent, 25 percent, 35 percent or more, depending on the homeowner's tax bracket.
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So if you've been counting on this deduction as you budget, you'll have to adjust. And if you are planning to take out a new mortgage, the lack of this deduction is just one more reason to come up with a 20 percent down payment to avoid paying PMI in the first place.
The most valuable of the expiring deductions is for loan forgiveness, a discount on the mortgage debt. In recent years, growing numbers of homeowners who ran into trouble got their lenders to agree to remedies such as short sales, in which the lender accepts the home's sale proceeds as enough to pay off the debt, even if the debt was larger.
The difference between what was owed and what was actually paid is considered taxable income. The tax has been waived for a number of years; now it will again be charged. That could easily add thousands to tax bill of a homeowner who engages in a short sale.
Fortunately, rising home values are reducing the ranks of underwater homeowners who owe more than their homes are worth, but there are still millions of them. A short sale is still less damaging to the borrower's credit than a foreclosure, but neither is desirable.
Also expiring are credits for energy-efficiency improvements such as installing better doors and windows, insulation, furnaces, heat pumps, water heaters and central air conditioning. Some other credits remain, for things such as installing solar water heaters, wind turbines and geothermal heat systems.
Fortunately, these three breaks remain in effect for the 2013 return due in April, so you can still claim any that apply to you for the 2013 calendar year. And there's always a chance Congress will renew some or all of them, so stay tuned. For now, though, it's prudent to assume none of these breaks will be available in 2014.
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The left will hate this because the bottom 50% will have to pay something, the right will not like it because they will lose their shelters and the guy in the middle would be the true beneficiary, but neither party cares about him anyway. The lower 50% is where the votes are, the upper 5% is where the money is, and the guy in the middle is as important to R's & D's as last years' poll.
Quit whining about the rich! I made them my customers, and they support 22 families in our business.
Now I made middle class!
They put cheese on our burgers!
The key is to get off your butt, get educated, quit whining and DO something!
"Loan Forgiveness", what a crock of sh!t. I paid my mortgage off, and all I have to show for it are property taxes that now exceed what my mortgage payment used to be. Who do you think is footing the bill for all of these people who made poor choices, and could not afford the loan they took out?
I Don't mind paying my share of taxes, but I know that I am paying my share and the lazy asses that lives next door, does not work and lives much better than my family. Why because they get welfare, free housing, and food stamps...oh yeah that I am paying for, along with all the rest of us hard working Ameicans. Taxes need to be rounded out better, flat tax is a great idea the more you make the more you pay, why is that the little man has to pay all the taxes. The banks are getting extremely rich off all of ****es that keep paying high interest rates, and fees that are slapped on to housing loans just so they can get rich. Don't get me started on the ****ing government and there wrong ways of taking care of the American public.
When people work hard just to see it all drift away to support those who don't work and an uncaring government that sold out to corporations and special interests, that's the beginning of class warfare.
The rich, meanwhile, stay out of it and just count their money.
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