Tax season is upon us. Good or bad, we all have to participate in the process and if you are a home owner with Delray Beach homes for sale, you should know what type of tax laws are in place that can help you. There are some key real estate related tax measures that can benefit home owners when filing their taxes.
Cancellation of Debt Income
If you have had any issues with Delray Beach homes for sale, such as facing foreclosures, the Mortgage Forgiveness Debt Relief Act of 2007 can help provide you with relief. This act offers relief to owners of Delray Beach homes for sale and other properties who would have owed taxes on forgiven mortgage debt after facing foreclosure.
Before this law was enacted a homeowner of Delray Beach homes for sale or other properties that had renegotiated a home loan and had the amount of principal owed lowered, would have to pay taxes on the amount of forgiven mortgage debt. For financially strapped homeowners, to face taxes on top of their property debt problems, this could be devastating for them.
Now, with the 2007 law, homeowners are excluded from the mortgage debt from their taxable income. This provision applies to debt forgiven between 2007 through 2014, and the Internal Revenue Service states that up to $2 million of forgiven debt is now eligible for this exclusion to be untaxed.
Property Tax Addition to Standard Deduction
Homeowners who itemized when listing their Delray Beach real estate were able to take a deduction on their real estate taxes. By using Schedule A, annual payments to county and local governments could be claimed to increase the taxpayer’s deduction total.
Now, however, homeowners who do not itemize will get to claim at least a portion of their real estate tax payments as part of their standard deduction. Up to $500 for single homeowners, double that for joint filers, can be added to the taxpayer’s standard deduction amount. Simply check box c on line 39 of Form 1040 or line 23 of Form 1040A.
Surviving Spouse Home Sale Tax Exclusion
Surviving spouses can get some tax relief when it comes to the sale of their home on the Delray Beach homes for sale real estate rolls. The Mortgage Forgiveness Debt Relief Act of 2007 has a provision that allows the surviving spouse to take advantage of the full $500,000 sale exclusion if the sale occurs within two years of spouse’s date of death.
The surviving spouse still must meet the regular ownership and use requirements; that is, the widow or widower must have lived in the property as his or her primary residence for two of the five years before the sale.
There is no sunset date for this tax law. The surviving spouse home sale exclusion relief is permanent.
Energy Saving Home Improvements
By making energy-efficient improvements to recently bought homes for sale in Delray Beach, home owners may be eligible for tax breaks. Energy-saving options added to Delray Beach homes for sale and similar properties will work to your advantage during tax season.
Some of these include items such as insulation, windows, doors, roofs, water heaters and heating and air conditioning systems. Alternative energy equipment made to homes for sale in Delray Beach can help you save even more on your taxes. Qualifying equipment includes items like solar hot water heaters, solar electric equipment, wind turbines and fuel cell property.
The energy saving home improvement credit is available through 2016. So you must always keep an eye out for home-related tax changes. If any can help you and homes for sale in Delray Beach, be sure to take advantage of them while they still are on the books.