By John Le Francois
www.lasvegasmtg.com Report: Great News for Las Vegas Home Owners. Tucked away in the fiscal cliff deal were some extensions that will give Las Vegas homeowners some relief for at least one more year. When the fiscal cliff was ratified by Congress on January 1 and signed into law on January 2 by Pres. Obama was the reinstatement of the Mortgage Debt Relief Act and the Deductibility of Mortgage Insurance.
Mortgage Debt Relief Act
The mortgage debt relief act was originally instated in 2007 to assist homeowners avoid paying income tax on the difference of the house that was sold versus what was owed. When an owner occupied house is short sold it is negotiated that there would be a principal reduction upon the short sale agreement between the existing lender and the owner. The IRS considered the principal amount forgiven as income causing the seller more financial harm in the process of the short sale. The law was set to expire on December 31, 2012. The mortgage debt relief act will now extend to January 1, 2014 and only applies to first homes.
Mortgage insurance deductibility extension
Congress also passed the extension to continue the tax deductibility for mortgage insurance premiums through the year 2013 that was established in the American taxpayer relief act of 2012.
Mortgage insurance premium will be deductible for those owners that have an adjusted gross income of hundred thousand dollars. There is a provision to decrease by 10% for each additional $1000 in the adjusted gross income calculation. Once income reaches $110,000 and the deduction will be phased out completely. Current loan program types that have a monthly mortgage insurance premium are conventional loans greater than 80% loan to value and FHA home loans. VA home loans have an upfront funding fee but no monthly recurring mortgage insurance.
Both of these new extensions will greatly ease the concerns of homeowners and will assist in stabilizing the home market in Las Vegas Nevada.