If you are like most St. Cloud homeowners, this is not the time of year you relish thinking about next year’s April 15 tap on the shoulder from Uncle Sam. Nonetheless, the calendar doesn’t lie. In a matter of days, New Year’s Eve will be here—and once the champagne corks have popped, it’s entirely possible if some t’s weren’t crossed and i’s dotted, St. Cloud homeowners might accidentally miss a year-end tax break deadline.
Tax advice is best left to your own St. Cloud financial advisor, which is why I don’t offer any myself. But some useful articles have recently surfaced (in Forbes, Trulia, TheFiscalTimes, among others) highlighting three of the tax provisions that are set to expire at the end of 2016. A few of them could affect some St. Cloud homeowners’ bank balances come tax time.
If any of these sound like they could impinge on your own situation, it’s probably a good idea to check in with your financial advisor to see if action is warranted before year’s end. Here are some of the areas involved:
1. Energy-saving home improvement. Homeowners have been able to take advantage of all sorts of qualified energy efficiency improvements to gain various tax breaks—some of which even apply to second homes, too. Going green has resulted in some bank account green, too—but many (if not most) of these breaks are expected to expire this year.
2. Mortgage insurance. Sometimes abbreviated as PMI (for “private mortgage insurance”), this is the product that protects lenders in the event of default. It’s sometimes required for borrowers whose down payments are below a certain level. Existing law allows taxpayers to deduct PMI payments along with their mortgage interest—but the PMI portion is set to expire at year’s end.
3. Mortgage debt. Following the financial meltdown, Congress moved to allow struggling homeowners who lost their homes to foreclosure, or who benefitted from any form of debt forgiveness, to escape taxation on the amount saved. But that exemption expires on December 31 of this year unless a qualifying written agreement has been recorded before then. The details are definitely best directed to your tax expert!
The lists of expiring tax breaks are generally accompanied by some if’s and likely to’s because Congress sometimes extends them during their last pre-holiday session—or re-enacts them later on. But as you probably suspect, counting on that would be risky business.
St. Cloud homeowners who don’t see any familiar categories in that list can now breathe a sigh of relief and go back to their other holiday matters. Meantime, I’ll be here at the office, ready as always to help out with any and all St. Cloud real estate matters!