I know you’re thinking “Jolynn, I’m still on a Christmas high and here you go bringing up this tax stuff!” Soon you’ll be getting your W-2s and 1099s and unfortunately it’s time to start getting documents together. If you bought a house, sold a house, or refinanced, some of your closing costs may be deductible. Make sure and have your settlement sheet available to your CPA.
Some good news for this tax year, on December 19th Congress passed The Tax Increase Prevention Act, which extended some 50 different tax breaks from 2013 into the 2014 year. While I’m not a tax expert there were some key housing breaks extended:
- If you had a short sale in 2014, you may exclude up to $2 million in discharge of residential mortgage indebtedness from gross income. Normally taxpayers have to pay income taxes on forgiven debt.
- Mortgage insurance premiums were included, which allows eligible borrowers with adjusted gross income of less than $109,000 to deduct the eligible amount of their 2014 mortgage insurance premiums. This includes any up front mortgage insurance/funding fees on government loans. This dollar figure should be on your 1099 tax form from your mortgage servicer.
- Up to $500 of energy efficient improvements to your home are tax deductible. If you installed new windows or upgraded the HVAC unit, find those receipts!
As I said earlier, I am not a tax professional but I know people who are! There are many new provisions to Obamacare to where an individual who may have been able to prepare their own taxes previously may now need the help of a professional. If you need a referral for a great CPA, please contact me. The ones I know are similar in price with the tax preparers you find in the national chains but are well qualified and have CPA certifications behind their name.
If you know of anyone who plans on buying a house this year, please have them contact me BEFORE they file their taxes! Their tax filing could have a huge impact on what amount which they might be able to qualify.