Thursday, April 24, 2014

Most of us have just completed our annual dance with Uncle Sam by wrapping up annual tax business. But it's not too early for homeowners to be re-thinking some of the deductions being made, because they won't be around to claim next April.

According to a recent report at businessmanagementdaily.com, unless Congress enacts a new “extenders” tax bill in 2014, as many as 55 tax breaks that expired at the end of 2013 will stay off the books for good.

Homeowners should hope for the best and plan for the worst. Although some of these items have been extended in the past, often retroactively, there are no guarantees this time around.

Among those 13 key breaks for homeowners that expired after 2013 are:

*Building write-offs: A special tax law provision allowed you to use a fast 15-year depreciation period for qualified leasehold improvements and improvements placed in service in 2013. Beginning in 2014, the usual 39-year period applies.

*Forgiven mortgage debts: Under a special tax law exception, in 2007-2013 a homeowner could exclude from taxable income up to $2 million of forgiven mortgage debt that was used to acquire a principal residence. Normally, forgiven debt is treated as taxable income (although certain other exceptions may get the taxpayer off the hook).

*Residential energy credits: A homeowner could claim a credit for part of the cost of energy-saving home improvements made in 2013 (subject to certain limitations and subject to a lifetime credit maximum of $500). This credit has been extended numerous times, but its future for 2014 and beyond is uncertain.

*Mortgage insurance premiums: Previously, a taxpayer could deduct mortgage insurance premiums paid on a qualified residence such as a principal residence or second home (e.g., vacation home). But the deduction was phased out for an AGI between $100,000 and $110,000.

Stay tuned and we'll keep an eye on whether or not these deductions are re-established for the 2014 tax year.

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