Many homeowners were relieved to hear the news that Congress approved the tax law to avert the “Fiscal Cliff” last week resulted in several laws and acts being extended well into 2013. One of the Acts that was scheduled to expire was the Mortgage Forgiveness Debt Relief Act.
The Mortgage Forgiveness Debt Relief Act allows current homeowners to exclude the debt forgiven in a short sale or mortgage principal of their primary residence from their taxable income. I think this is a good thing as it will help deter against foreclosures in the year. With the expiration of the extended act, homeowners would have had to pay taxes on the difference in the debt they are forgiven. The new expiration date is now set for the end of 2013.
The MID (mortgage interest deduction) is still on the table but is still in question. For more about this and how it affects you, click here.
Speaking of taxes, homeowners can expect to claim deductions on all of their mortgage insurance premiums again. To calculate your PMI savings, click here. This originally expired at the end of 2011. We can also expect to see this last throughout the new year.