Many tax deductions that homeowners have enjoyed during the last few years are winding down with the 2013 tax season. As you prepare to file your taxes, check the following deductions and if eligible, make sure to include them. For most, it’s the last chance
This popular tax credit helps you offset what you owe the IRS dollar-for-dollar for up to 10% of the amount you spent on certain home energy-efficiency upgrades, from insulation to water heaters. However the credit is capped at $500 (less in some cases). Even so, the right improvements could lower your utility bills indefinitely. To see if you qualify, go to EnergyStar.com.
Mortgage Debt Forgiveness
Many homeowners were caught in a financial bind because they could not afford to pay their mortgages. In 2007, Congress passed the Mortgage Forgiveness Relief Act to help.
If a homeowner was facing foreclosure, sold their home in a short sale or restructured their debt, they were liable to pay taxes on the forgiven amount. The relief act, which has been extended twice, allowed certain borrowers to exclude that amount as income on their tax returns. For more information on this and to check if you qualify, the IRS has detailed information.
Private Mortgage Insurance (PMI)
If you put down less than 20% when you both your home, most likely you were required to get private mortgage insurance. PMIs are taken out to protect your lender in case you default on a home loan. You can deduct the cost of the insurance premium you pay each month. To find out if you qualify, check with your lender for details.
Why Might the Tax Benefits Not Be Renewed?
Although the expiring tax benefits were renewed retroactively in past years, that may not happen in 2014 because many in Congress would like to see comprehensive tax reform rather than scattershot renewals of individual provisions. This could delay a decision on the homeownership tax benefits until the big picture budget and tax issues are resolved.
If you qualify, file for the deductions as you prepare your 2013 taxes. They won’t be around for next year’s tax credits.