Tax Breaks Columbia SC Homeowners May Lose

Tax breaks Columbia SC homeowners may lose if Congress fails to reinstate themDozens of tax breaks expired on January 1st. Columbia SC homeowners may have to do without some of these when they prepare their taxes next year, unless some or all of these deductions and breaks are retroactively extended by Congress. No one can confidently predict what will happen with restoring some or all of these deductions. The situation is further complicated by the fact that Congress and the Obama administration want to accomplish major tax reform in 2014.

Expiring Tax Provisions of Most Importance to Columbia SC Homeowners

Mortgage Insurance Premiums Deduction: Since 2007, qualifying Columbia SC homeowners have been able to deduct premiums for mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, the Rural Housing Service, and private mortgage insurance. Columbia SC homeowners whose incomes are not too high can treat such payments the same as mortgage interest payments. Unless the law is extended, no deduction will be allowed for amounts paid or accrued after Dec. 31, 2013.

Discharge of Indebtedness on Principal Residence: Since 2008, Columbia SC homeowners have been allowed to exclude from their taxable income up to $2 million of debt forgiven on their principal residence by a lender in a short sale, mortgage restructuring, or forgiven in a foreclosure. Unless this provision is extended, the exclusion will not apply to indebtedness discharged after 2013. If this provision does expire, the impact will vary from state to state.

Tax Credit for Qualified Energy Efficiency Improvements: Columbia SC homeowners have been able to claim a maximum lifetime tax credit of up to $500 for installing energy efficiency improvements in their main homes, including the cost of insulation, windows, doors and roofs. The credit expired at the end of 2013.

Credit for Construction of New Energy-Efficient Homes: Since 2006, certain contractors have been allowed an efficient-home credit of $1,000 or $2,000 for constructing or manufacturing qualifying energy-efficient homes. Like the other energy efficiency deductions, this expired at the end of 2013.

Many of these provisions are quite popular and likely will be extended by Congress. Exactly when or how lawmakers will get around to doing this is unclear.

Check out our other articles and tips on taxes that affect you as a Columbia SC homeowner by clicking on the Taxes link to your right under Columbia SC Real Estate Categories.

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