CODI Income Tax Exemptions
Mortgage debt is normally forgiven in the event of a foreclosure or short sale and charged to the taxpayer as income. This default mortgage debt forgiveness is called a Cancellation of Debt Income aka CODI. The IRS has temporarily exempt CODI (for as many as 100,000 a year) from incurring income tax liability. This was done to avoid penalizing home owners for such settlements on upside-down mortgages. Although the exemption expired at the end of 2013 there have been talks about extending it into the current year.
Mortgage Interest Tax Break
There are great benefits to itemizing deductions. Itemizing is a pre-requisite to taking a mortgage interest rate deduction yet so many people don’t take the time to do it. For those who have a high mortgage or property tax bill, you should be itemizing your property related deductions. Even if you feel that you don’t have enough non-mortgage related deductions, you owe it to yourself to take a closer look. Work with a tax preparer to make sure you don’t miss any possible deductions. You never know until you take the time to look into it. You could be missing out on a thousand dollars or more in tax savings.
Green Home Improvement Tax Breaks
It’s time to focus on the green; green home improvements that is. Many home owners have already started to make energy efficient improvements to their homes. These improvements not only help the environment, they also help save home owners money on their utility bills. Another bonus to green home improvements is state, county and/ city tax breaks or tax credits. If you’ve made any environmentally friendly improvements this year be sure to list them. You don’t want to miss out on any advantages you are eligible for.