Below we have outlined a few tips to help you save money on your taxes, or even get a larger refund than usual. We recommend you visit a local tax professional to help you navigate these deductions. Your loan officer is a great resource for a referral.
1) The deduction of private mortgage insurance (PMI) has been extended. You may be able to deduct the amount you paid in PMI premiums for 2015, just like you would deduct the interest you paid on your mortgage. The deductibility is effective for purchase and refinance transactions closed after December 31, 2014. Borrowers with an adjusted gross income below $100,000 may deduct 100% of their MI premiums.
2) The Mortgage Forgiveness Debt Relief Act of 2007 has been extended through December 31, 2016*. The extension includes mortgage debt cancelled in 2015 as well as mortgage modifications in 2016. If you negotiated a mortgage modification in 2015, or receive one in 2016, you won’t be required to claim any of the principal forgiven by your creditor as income.
3) Mortgage interest deductions allow most homeowners to deduct all interest paid on first mortgages, second mortgages and loans taken for home improvements. Some limitations apply.
4) Home improvement tax credits allow homeowners to deduct enhancements made to their home to make it more energy efficient. You may qualify for a tax credit worth up to 30% of the cost of certain alternative energy equipment installed on or in your home ($2000 maximum credit). Some common energy efficient improvements include solar electric equipment and solar hot water heaters.
Remember, the 2016 IRS tax deadline is Monday, April 18.