Tax Breaks That Dissapear at Year's End

2016 could be the end of the tax breaks that homeowners once used to save some bucks. Before year’s end, let’s look at the tax breaks that you could use for the last time.

Many buyers and sellers use tax breaks that are likely to expire this year. What will keep them rolling is if Congress passes extensions for specific credits to extend for the next several years. At the rate Congress is working, it’s likely they won’t pass the extensions, leaving the taxes to expire.

If owning a home is a goal of yours by year’s end, you better act fast.  It’s within reach to claim the years end deductions and write-offs. Here’s what is likely to disappear by year’s end.

End of mortgage debt forgiveness

Usually, when a mortgage lender writes off part, or all, of a forgiven debt, the sum is sent back to the borrower as taxable for federal income tax purposes. This is typical for all debt including mortgages. Congress passed the Mortgage Debt Relief Act during the Great Recession to help struggling homeowners. This rule allowed for homeowners who lost their home, or qualified for repayment adjustments didn’t have forgiven debt taxed as income. Congress renewed this several times, but it’s almost certain they will let this expire this year.

If you happen to be in the middle of discharging debt, there is good news! You can still qualify for the exception and won’t be taxed on the debt if your agreement to discharge the debt with the lender was written this year.

Write off mortgage insurance premiums while it’s still here

Lenders tend to be hesitant when the market is rough. Since the recession, lenders have been requiring private mortgage insurance (PMI) for buyers to protect themselves if the buyer defaults. Writing off PMI in past years wasn’t much of an option. In 2014 Congress passed a law that allowed some homeowners that qualified and itemized to claim a tax deduction for the cost of paying PMI for their homes. It could even be used on their second homes, most of them being vacation homes.

This is sadly one deduction that is ending in 2016.

Getting credit for going green

Having just bought a new home with new energy-efficient appliances means you can write off some of the cost. Those who installed electricity-generating systems in 2015-2016 can claim 30% of the cost, and the beauty of it all is there’s no limit on the dollar amount.

The items you can install in your house that are “green” can be insulation, HVAC equipment, windows, roofing, doors, biomass stoves, and even dishwashers; all these can add on your tax breaks.

However, these all expire at the end of the year so take advantage while you still can.

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