With political drama over the "Fiscal Cliff" over for now, home owners should know that several key tax provisions have been left in place. Mortgage interest deductions and mortgage debt forgiveness provisions remain in effect. In addition, you can continue to deduct the amount you pay for private mortgage insurance and take the energy efficiency tax deduction. These could have a big impact on any decision you make to buy or sell this year. Let's take a look at some specifics.

 

  • The mortgage interest tax deduction has long been a signficant reason for people to buy instead of rent. Although there had been some talk about the mortgage interest tax deduction, it was never seriously in trouble.
  • Homeowners in trouble and considering a short-sale will still be able to tax advantage of the won't have to pay taxes on the difference between the principal they owe and the amount the lender accepts. That makes short-sales much more attractive to owners.
  • The Washington deal also reinstated a deduction that lapsed a year ago for people who pay for personal mortgage insurance, which is often required for borrowers who make less than a 20% down payment. The result of the tax credit will save some borrowers hundreds of dollars.
  • The non-business energy property tax credit offers up to $500 off your taxes if you make energy-efficient improvements. Retroactive to January 1st, 2012, it means you can use it on projects you do this year or did last year. There are a variety of restrictions and caveats, which you can read about in this article.

 

Taken all together, Real Estate experts expect the provisions will help the growing housing market continue to improve in 2013. That's good news if you're in the market. Call me at 847-310-5300 and we can work together to get you the best deal possible in the coming year.

This blog is maintained by Michael of Kim Hughes & Company.