Did you buy a new home in 2015? If so, the last thing you want to worry about in the new year is your 2016 tax burden. As a property owner there are real estate tax deductions that can help save you money.
This past summer the Senate by partisan committee approved tax extenders that included collecting tax related deductions and credits- giving tax payers a tax break through the end of the new year if the bill fully passes. Amendments to this bill can change what you owe come April. Let’s talk about the tax credits and breaks that you could quite possibly be benefiting from.
Credits for energy efficiency house improvements.
Green improvements to homes have become a big trend in recent years. Not only do homeowners benefit from tax breaks, they also benefit from their home’s energy efficiency that helps reduce the cost of heating, water, and air-conditioning.
Deduction in local and state sales taxes.
Did you know that taxes on property can be deducted? In addition, interest paid on your mortgage can may be a tax deduction.
Mortgage debt forgiveness.
When a lender writes off a debt the amount that the lender has forgiven is taxable for federal income taxes. In 2007 however the Mortgage Forgiveness Debt Relief Act allowed debt forgiveness amounts to be exempt. The act was meant to be temporary to help people struggling in the midst of the housing crisis, and Congress is considering renewing it for 2016.
Mortgage insurance premiums deduction.
Today many lenders require home owners to acquire private mortgage insurance (PMI) but up until 2015 taxpayers could not write off this cost like they could the interest of a mortgage. If the bill is extended homeowners will be able to write off their PMI in 2016 as well.