Thanks to the law passed earlier this year by Congress to avoid falling off the “fiscal cliff,” there are many advantages when it comes to real estate tax breaks. First of all, thanks to this bill, the mortgage interest deduction remains the same for now. In addition, taxpayers with an AGI (adjusted gross income) of less than $100,000 per year can itemize and deduct all of their PMI, or mortgage insurance, payments. This deduction was last offered in 2011, but the bill put it back in play for all of 2012 and through the end of 2013. Next, the Mortgage Forgiveness Debt Relief Act was extended through the end of 2013, meaning that home owners who face a short sale or who receive forgiveness on their mortgage principal may exclude up to two million dollars of debt forgiveness from their taxable income. This is good news for those who are under water in their mortgages because it makes the options of short sales and loan modifications more attractive than foreclosure or bankruptcy. Finally, this bill brings back the $500 credit for making various energy-saving improvements to a principal residence through the end of 2013.
Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty and put us to work for you – 302-856-6434.