As you have already probably heard, the federal government narrowly averted a disaster by passing a “fiscal cliff” bill on New Year’s Day. The bill, which President Obama signed the day after it passed through the legislature, has important implications for the real estate market. Here are the four highlights of the bill that may benefit all homeowners in 2013:
- Energy Efficiency Tax Credit
If you plan to make any upgrades in 2013, consider energy efficiency. You can receive a 10% percent tax credit up to $500 on such improvements to your home. Furthermore, if you failed to take advantage of the credit in 2012, you’re in luck, as it’s retroactive. Speak to your tax professional for details.
- Mortgage Cancellation Relief
If you had part of your mortgage debt forgiven by your lender (on your primary residence) you may breathe a sigh of relief. The bill extended the provision, enabling you to forego paying taxes on the amount forgiven. For more details on this, please visit http://www.makinghomeaffordable.gov/pages/default.aspx
- Mortgage Insurance Premium Deductions
Taxpayers earning less than $110,000 a year can still deduct their mortgage insurance premiums—a much needed tax break for struggling families on tight budgets. Again, this is retroactive for 2012.
- Leasehold Improvements
If you need to perform qualified leasehold improvements on your commercial property in 2013, or did so last year, then you can still benefit from 15-year straight-line cost recovery, making things a bit easier on your bottom line.
Every tax situation is different so please talk to a tax advisor to address your specific circumstance.