On February 13th, 2014 Trulia put an article out regarding 3 Overlooked Real Estate Tax Breaks. This article was written by Tara-Nicholle Nelson and she provided us with a few tips that we can now share with you regarding your real estate taxes.
When it comes to taxes everyone wants to know ways that they can save, hoping to get something back rather than owing money. So what are some ways that you may have overlooked
1. State and Local Tax Breaks for Green Home Improvements. “As homeowners began embarking down a path of improving their home’s energy efficiency for a variety of reasons, including cash savings on their utility bills”, the improvements made set them up for some tax breaks. If you have made any improvements, be sure to keep your receipts and after further research into the tax laws, you may be eligible for a tax deduction.
2. Mortgage Interest Tax Break. According to Nelson, she believes that 60% of homeowners do not claim this deduction on their real estate taxes. “But why is this such a great deduction. If you have a high mortgage or property tax bill, it might be obvious that itemizing makes sense. But if not, you owe it to yourself – and your bank account – to at least try working with a tax preparer or committing to spend the time and energy it takes to explore the question of whether itemizing makes sense. Even an extra thousand dollars or two in tax savings can make a big difference to your savings and your financial future, over time.”
3. CODI Income Tax Exemptions– “Normally, defaulted mortgage debt that is forgiven through a foreclosure, short sale, deed in lieu of foreclosure or settlement via partial payment is actually charged to a taxpayer as income. It’s called Cancellation of Debt Income, or CODI. Under the 2007 Mortgage Debt Forgiveness Relief Act (“the Act”), though, the IRS has temporarily exempted CODI from incurring income tax liability for as many as 100,000 home owners a year, to avoid penalizing home owners for these sorts of settlements and resolutions to upside-down home mortgages.
The Act expired on December 31, 2013 (though talks are ongoing about extending it into this year). If you were one of the hundreds of thousands of American home owners who was able to close a short sale or settle a defaulted home loan in 2013, chances are good that you are eligible to tax advantage of the CODI tax break when you file your 2013 return.”
We hope this information helps you all out as you fill out your taxes!
-Realty Executives of New York