PMI tax deducability extended & Forgiven Mortgage Debt Relief approved

[ShanetheMortgageMan]

This week, Congress & the President approved or renewed several tax relief measures to make Mortgage Insurance (MI) tax deductibility available to borrowers for 3 additional years. The legislation is the same as what was passed last year, with MI premiums being fully deductible for taxpayers earning up to $100,000 and partially deductible for those with incomes between $100,000 and $109,000. This deduction now applies to policies written through the 2010 calendar year.

http://biz.yahoo.com/bizj/071220/1566565.html?.v=1

President Bush signed into law today a new measure giving tax breaks to homeowners who have mortgage debt forgiven. Under preexisting law, the debt forgiven by a lender, such as for short sales and refinances, was generally taxable to the borrower as debt discharge income. With the passage of the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer does not have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence.

This tax break applies to debts discharged from January 1, 2007 to December 31, 2009. Qualified principal residence indebtedness is debt incurred in acquiring, constructing, or substantially improving the residence (up to $2 million for refinances).

For purposes of calculating capital gains, any debts discharged excluded from income under the new law must be subtracted from the basis of the taxpayer's principal residence (but not below zero). However, taxpayers may generally exclude from capital gains income up to $250,000 (or $500,000 for married couples filing jointly) for properties owned and used as their principal residence for at least two of the last five years.

For a copy of the Mortgage Forgiveness Debt Relief Act of 2007, go to http://www.govtrack.us/congress/bill.xpd?bill=h110-3648

Please consult a tax professional for specifics.

[Anonymous]

I knew it would be a go --- but did they really have to wait until the last minute?