There are 2 important Columbia SC real estate tax deductions you won’t be able to claim in 2012.
Congress was so busy bickering at the end of 2011 that it allowed two important tax breaks for home owners to expire.
Columbia SC Real Estate Deductions We Lose in 2012
1. You can no longer deduct the cost of private mortgage insurance premiums.
2. You aren’t getting a tax credit for some of your home energy improvements.
You can take advantage of these provisions when you file your 2011 tax return — but beyond that, who knows?
Private Mortgage Insurance
Up until the end of last year, you could deduct your private mortgage insurance premium (PMI) when calculating your income taxes. It was a benefit targeted to lower- and middle-income home owners. Once you made $100,000 or more, it started disappearing and anyone who had more than $110,000 of adjusted gross income couldn’t use it.
The home owners who have to get mortgage insurance are Columbia SC real estate buyers with less than a 20% down payment and refinancers with less than 20% equity. That’s more often first-time home buyers or younger home owners and less often move-up buyers who’ve built up equity in their homes. So in taking away the PMI deduction, Congress is raising taxes paid by first-time home buyers and younger home owners leaving them with less money to spend on housing. That’s especially headed in the wrong direction when the housing market is struggling to recover.
Energy Tax Credit
The tax credit for energy efficiency upgrades on Columbia SC real estate wasn’t enormous — it was capped at $500 or 10% of the cost for some projects; less for others. But it was a nice incentive to add insulation, new windows, or to upgrade your HVAC system with a more efficient unit.
Home ownership and energy independence advocates will fight to get those expired tax rules back on the books in 2012 and to have them apply retroactively. It’s a familiar fight — they had to do the same thing at the end of 2010. The battle this year is more complicated however, since we’re in an election year.
Most of us consider the renewal of those policies is a no-brainer. And we really don’t appreciate it when Congress lets those rules expire at the end of one year and then leaves us to wonder the rest of the next year whether they’ll be renewed.
Will you be claiming either of these Columbia SC real estate tax breaks on your 2011 returns?