Are you Facing Foreclosure? Know Your Deductions and Credits

The Mountain Life Team Blogger April 4, 2012

According to NPR, more than half the nation saw a spike in foreclosures last month. In Georgia alone, there were 12,467 Properties entering into Foreclosure in January of 2012. That was a 17% Increase from December 2011. In our North Georgia Mountain Real Estate Market, of the 313 Homes Sold in Gilmer, Fannin, Union and Towns Counties, 108 were Foreclosures according to our Northeast Georgia MLS. That is 34.5% of  the homes sold in the first quarter of 2012.

With more and more homeowners facing Foreclosures, experts at The Tax Institute at H&R Block offer the following information on credits and deductions, which can provide assistance to individuals prior to and after this unfortunate circumstance.

 

  • Mortgage Debt Forgiveness: homeowners who experienced foreclosure on their primary home may be able to exclude the amount of canceled debt from their taxable income if they meet specific criteria.
  • Mortgage Interest Deduction: taxpayers are eligible to deduct qualified mortgage interest on their main home and a second home if they itemize deductions on Schedule A.
  • They must be legally liable for repayment of the loan to deduct the loan interest.
  • For 2011 filings, taxpayers who could not pay at least 20 percent of their down payment may have been required by their lender to pay for private mortgage insurance (PMI). If the taxpayer qualifies, the PMI may be deductible as mortgage interest.
  • Real Estate Taxes: homeowners are able to deduct real estate taxes separately from mortgage interest on Schedule A and from property taxes.
  • Non-Business Energy Property Credit: taxpayers may claim energy-efficiency credits for up to 10 percent of the cost of various home energy-efficiency improvements.
  • Residential Energy Efficient Property Credit: a nonrefundable personal credit is available for property used to produce energy in a personal residence located in the US .
  • The credit is also available for wind energy property and geothermal pumps.
  • Real estate taxes must be based on the home’s value and assessed at least annually.

Please seek the advice of your CPA or Accountant when facing Foreclosure. If there is enough time, you could also consider a Short Sale to keep your North Georgia Mountain Home from going into Foreclosure. Please Contact The Mountain Life Team today for a Free Consultation about helping you avoid Foreclosure. You may also call us at 877.633.8186.