Home Loan Focus

Archive for the ‘Mortgage Related Tax Deductions’ Category

You may have heard of the great favor that Congress did for everyone before the break last year.  They made a tax deduction that forgives taxpayers from having to pay income tax on debt that is washed away during a foreclosure. Not much of a relief to someone that loses their house, kind of like getting knocked down and then told that you won’t get a slap in the face too.

Well Congress and the President did do a little thing that will help some borrowers get financed and save money at the same time.  Private Mortgage Insurance can now be deducted from your taxes like mortgage interest.  The deduction will only be around until the end of 2010.

When the Sub Prime market was ramping up out of control most borrowers tried to pen creative ways to avoid PMI, but now many people that could get approved without it before, are finding that if they want financing at all, they have to consider this option.  So by making it tax deductible, the cost is offset by the governments tax revenues.

The legislation is retroactive to Jan. 1, 2007. As a result, homeowners who had mortgage debt canceled this year won’t have to pay tax on it. The tax relief is scheduled to expire at the end of 2009, reflecting lawmakers’ belief that the subprime crisis “is a temporary problem so you only needed a temporary solution,” Schwarz says.

President Bush last week signed the bill, which also extends a tax deduction for private mortgage insurance through 2010.

Hartford Business