Things homeowners need to have in mind for your 2013 taxes

If you are a homeowner, the following are things you might want to take into consideration when you file your taxes this year.

PMI Deduction

This tax rule lets you deduct the cost of private mortgage insurance, which is what you pay your lender each month if you put down less than 20% on a home. PMI protects the lender if you default on the home loan. Your deduction could amount to a couple hundred dollars depending on your tax bracket and other factors.

Find out if you qualify for and how to take the PMI deduction.

Energy-Efficiency Upgrades

This tax credit lets you offset what you owe the IRS dollar-for-dollar for up to 10% of the amount you spent on certain home energy-efficiency upgrades, from insulation to water heaters. On the downside, the credit is capped at $500 (less in some cases). But on the bright side, the right improvement could lower your utility bills indefinitely. 

Debt Forgiveness
When you go through a short sale, foreclosure, or deed-in-lieu, your lender typically lets you off the hook for some or all of what you owe on your mortgage. 

That forgiven mortgage debt is income, on which you’d typically have to pay income tax. 

Suppose you’re in financial distress and your lender agrees to let you short-sell your home, say for $50,000 less than you owe on the mortgage, and forgive you for the balance. Without the protection of the Mortgage Debt Forgiveness Act, you’ll owe income tax on that $50,000. 

It’s likely if you had the money to pay income tax on $50,000, you’d have used it to pay your mortgage in the first place. 

This Year’s Simplified Option for the Home Office Deduction

If you work from home, you may qualify to use a new, simplified option for claiming the home office deduction when you file your 2013 taxes.

It lets you claim $5 per sq. ft. for up to 300 sq. ft. instead of having to compute the actual expenses of your home office using a 43-line form. To calculate the square footage of your office, just multiply the length of two walls. For example, an 8-by-10-foot room is 80 sq. ft. And at $5 per, that’s $400.

The simplified option is easier, but the basic requirements for claiming the home office deduction haven’t changed. Your home office still must be used for business purposes exclusively, and on a regular basis.

SOURCE: The National Association of Realtors