Homeowners Get Relief With New Tax Forms

If you own a home, you may have found filling out last year’s tax forms to be an unpleasant battle. It wasn’t obvious where to apply for various deductions and tax breaks for homeowners were in short supply. This year, homeowners will be pleased to discover that the situation has changed significantly.

Changes in Tax Forms that Benefit Homeowners: Stimulus Package

The Federal government has decided to respond to the current housing crisis with an economic stimulus package that they hope will stimulate market growth. Around $112 billion will be distributed to homeowners, most of which will go to those who make less than $75,000 a year or couples with combined incomes of less than $150,000 a year.

Changes in Tax Forms that Benefit Homeowners: Deductions

The form has been streamlined to make deductions easier to claim for homeowners. The form allows taxpayers to deduct local and state sales taxes rather than local and state income taxes.

Changes in Tax Forms that Benefit Homeowners: Mortgage Deduction

If you paid for mortgage insurance in 2007 you are eligible for a mortgage insurance deduction. As with many other deductions, your income affects your eligibility. If your income is over $100,000, you may not be eligible for this deduction. However, if you make more than $100,000 a year, you should generally not be paying mortgage insurance in the first place.

Changes in Tax Forms that Benefit Homeowners: Debt Relief for Mortgages

When debt is forgiven, the amount that the borrower saves is considered income for purposes of taxation. Under the current provisions, homeowners can exempt debt forgiveness for any loan balance up to $2 million with Form 982.

If you are a homeowner who has been struggling with mortgage payments, these changes in the tax code should be welcome news. It’s a good idea to talk with a financial expert before filing to make sure you are taking full advantage of these tax rules as a homeowner.