Popular Homeowner Tax Benefits Might Disappear in 2014

Popular Homeowner Tax Benefits Might Disappear in 2014 - Quicken Loans Zing Blog

If you’re a tax-paying homeowner, there might be some bad news on the horizon.

Our legislators in Washington, D.C. haven’t exactly seen eye-to-eye on a lot of things in 2013. In addition to contentious and ongoing debates on the debt ceiling and sequestration cuts, it appears as though a number of tax deductions might be left to expire, including several that involve homeownership.

The Good News

These tax deductions are really popular, and if there’s one thing that politicians love doing, it’s pleasing their constituents. According to Stephen Fishman of Inman News, the Obama Administration and several key members of Congress have been working to extend some of the expiring credits.

Their efforts are complicated by the fact that many politicians are looking for far-reaching and comprehensive tax reform and there could be resistance to picking and choosing which deductions and credits to extend, instead of tackling the whole issue.

While preliminary efforts have stalled, Congress could work quickly or retroactively to reinstate certain tax deductions, should a consensus be reached.

The Bad News

We all know the political winds shift quickly. But as of right now, there’s been no action to extend or prolong certain key tax deductions. It’s unlikely that Congress will take any action before the holiday recess, and the current tax legislation is set to expire on December 31. Barring last-minute, miraculous or retroactive action, it looks like homeowners will have to start accepting the reality that these tax incentives might be gone.

The Potential Impact

In a separate article, Fishman details all of the real estate tax implications of the legislation expiring. You can see the full list here, but below is a summary of some of the major ones and how they could impact you in 2014:

  • Mortgage insurance premiums deduction – As long as your income wasn’t over the maximum threshold and provided your mortgage met certain standards, you could deduct your PMI premiums the same way you could mortgage interest. Not anymore, unless Congress acts.
  • Discharge of indebtedness on principal residence exclusion – A fancy way of saying that, in certain circumstances, you were able to exclude up to $2 million of debt forgiven if your primary residence underwent a short sale, restructuring or loan forgiveness of some kind. Any such principal reduction will be counted towards your taxable income as of 2014.
  • Tax credit for qualified energy efficiency improvements to principal residence – You used to be able to deduct up to $500 annually for making energy-efficient improvements (like insulation, windows, doors and roofs) to your primary residence. Looks like this is going away too.

As our elected officials continue to debate the federal budget, more cost-cutting measures like the elimination of tax incentives will no doubt be discussed.

Nobody likes having to pay more taxes. But are these steps necessary to balancing the budget? Give us your thoughts by posting a comment below!

 

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6 Responses to Popular Homeowner Tax Benefits Might Disappear in 2014

  1. Lydia Watts January 7, 2014 at 6:05 pm #

    When our Politicians in Washington forget that,”we the people” put them in their jobs they have got to go. We put them there to help us and work with us and not against us. The middle-class is being pushed further and further into the roles of the lower class. Now they are taking away some of our Homeowner tax benefits. Is it that they think the people are too stupid to see it or are not paying attention? Let a lot of them see what it feels like to be unemployed and strapped for money to simply pay for the necessities in life. They work for us so it’s time we tell them we want new elected officials! I want hard working Officials who can feel my pain!

  2. Joyce Stallworth January 13, 2014 at 5:17 am #

    Thank you Linda Watts. You hit the nail right on the head with your comment. They have to GO ! They have sat on their buttocks, and done nothing for two or more years for the people. If they had a real job they wouldn’t be paid. They party to much !. Give themselves raises ! We should be so lucky. Look out boys and girls election time is coming around soon. ! ” We the people will be heard.

  3. Gary January 14, 2014 at 5:41 pm #

    Revolution that’s all I got to say

  4. Chris L January 14, 2014 at 5:45 pm #

    Wait a minute! Who do you think benefits most from mortgage interest deductions? 77 percent of the deductions went to people earning over $100K and 35% went to those earning over $200K. Why should my taxes subsidize people who could well afford to own a home without the deduction? It would be much better to eliminate the deduction entirely and lower tax rates across the board to compensate. Or – offer a tax credit instead of a deduction and limit the amount eligible to something like the median house price. Studies have shown that the mortgage interest deduction has done little or nothing to boost home ownership.

  5. lisa evans January 14, 2014 at 7:24 pm #

    Well Chris, we people who earn over 100K ALSO pay our taxes and a LOT of it. Lets not fight among ourselves and stay focused. we need new officials. PERIOD. it does not matter if we want to lower taxes or change the system the people in place are NOT the ones to make middle class beneficial change happen.

  6. Bob January 14, 2014 at 8:25 pm #

    Everyone has missed the real issue! I want ALL DEDUCTIONS gone by abollishing the income tax completely. The politicians favorite trick is get us to argue with each other over deductions for the rich and poor so you will forget they are enslaving us by stealing our money. the income tax is a SLAVE TAX! You are all slaves to the state because you believe they have the right to ROB (tax) your labor. The income tax keeps the poor, poor, and the rich less rich. For the first 137 years America did NOT have an income tax and became the richest nation on the planet! Why? Because we were free from the thieves in Washington who now steal our money so we have less. WAKE UP AMERICA!!!!

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