There was plenty of discussion and debate leading up to the New Year’s looming “fiscal cliff”. Ultimately, the event was avoided, but not before legislation was passed which may benefit homeowners in Chicago and nationwide.
If you have yet to file your 2012 taxes, take a minute to review the tax limitations and credit extensions, which Congress passed through the HR 8 legislation. You’ll want to ensure you’re paying the proper tax bill come April 15.
Of course, every individual’s tax situation is unique. Review your allowable deductions and credits with your tax preparer.
Energy Updates
The tax credit for homeowners to receive a ten percent deduction, up to $500, for energy efficient improvements to homes is extended for 2013.
Estate Tax
Individual estates valued at up to five million dollars and family estates valued at up to ten million are now exempt from estate tax. After those cutoffs, the rate is 40 percent, which is up from 35 percent.
Mortgage Forgiveness Debt Relief Act
This act was also extended through 2013. It means that debt reduced through mortgage restructuring or debt forgiven in the case of a foreclosure may not be taxable.
Mortgage Insurance Premiums
This deduction for those making under $110,000 is extended through 2013. This deduction is also available retroactive for 2012. Mortgage insurance premiums paid as part of a conventional or FHA mortgage are eligible, as are premiums paid to the USDA.
Pease Limitations
These limitations that reduced the value of itemized deductions are permanently repealed for most taxpayers. However, they will be re-instituted for individuals making over $250,000, and for married couples making over $300,000 and filing jointly.
As a homeowner, you get access to special tax breaks which are unavailable to renters throughout Illinois and the country. Don’t leave tax dollars on the table. Speak with your accountant to see what claims you may make.
The deadline for filing 2012 federal tax returns is Monday, April 15, 2013.