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Carol Duran's Blog

By Carol Duran | Broker in Chicago, IL
  • Renovated NE Corner Unit!

    Posted Under: Home Buying in Chicago, Investment Properties in Chicago, Home Ownership in Chicago  |  June 25, 2014 12:18 PM  |  191 views  |  No comments







    Contemporary renovation completed in 2012. North East corner two bedroom, two bathroom unit with expansive windows. Beautiful Lake Michigan, park and city views. Fabulous natural light. Kitchen is open to the living room/dining room area. Espresso cabinets in the kitchen and bathrooms. Wood laminate floors in main areas. Newer carpeting in both East facing bedrooms and abundant closet space throughout. Attached, heated, first floor garage parking space included. Well maintained building has a roof top pool and sun deck. Desirable, pet friendly building features an on-site manager, evening, overnight and week end door staff. Plus additional storage.

  • Steps to Take Before You Buy a Home

    Posted Under: Home Buying in Chicago, How To... in Chicago, Home Ownership in Chicago  |  June 4, 2014 8:08 AM  |  290 views  |  No comments

    Most potential homebuyers are a smidge daunted by the fact that they’re about to agree to a hefty mortgage that they’ll be paying for the next few decades. The best way to relieve that anxiety is to be confident you’re purchasing the best home at a price you can afford with the most favorable financing. These seven steps will help you make smart decisions about your biggest purchase.

    1. Decide how much home you can afford

    Generally, you can afford a home priced 2 to 3 times your gross income. Remember to consider costs every homeowner must cover: property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care if you plan to have children.

    2. Develop your home wish list

    Be honest about which features you must have and which you’d like to have. Handicap accessibility for an aging parent or special needs child is a must. Granite countertops and stainless steel appliances are in the bonus category. Come up with your top-five must-haves and top-five wants to help you focus your search and make a logical, rather than emotional, choice when home shopping.

    3. Select where you want to live

    Make a list of your top-five community priorities, such as commute time, schools, and recreational facilities. Ask your REALTOR® to help you identify three to four target neighborhoods based on your priorities.

    4. Start saving

    Have you saved enough money to qualify for a mortgage and cover your downpayment? Ideally, you should have 20% of the purchase price set aside for a downpayment, but some lenders allow as little as 5% down. A small downpayment preserves your savings for emergencies.

    However, the lower your downpayment, the higher the loan amount you’ll need to qualify for, and if you still qualify, the higher your monthly payment. Your downpayment size can also influence your interest rate and the type of loan you can get.

    Finally, if your downpayment is less than 20%, you’ll be required to purchase private mortgage insurance. Depending on the size of your loan, PMI can add hundreds to your monthly payment. Check with your state and local government for mortgage and downpayment assistance programs for first-time buyers.

    5. Ask about all the costs before you sign

    A downpayment is just one homebuying cost. Your REALTOR® can tell you what other costs buyers commonly pay in your area—including home inspections, attorneys’ fees, and transfer fees of 2% to 7% of the home price. Tally up the extras you’ll also want to buy after you move-in, such as window coverings and patio furniture for your new yard.

    6. Get your credit in order

    A credit report details your borrowing history, including any late payments and bad debts, and typically includes a credit score. Lenders lean heavily on your credit report and credit score in determining whether, how much, and at what interest rate to lend for a home. Most require a minimum credit score of 620 for a home mortgage.

    You’re entitled to free copies of your credit reports annually from the major credit bureaus: Equifax, Experian, and TransUnion. Order and then pore over them to ensure the information is accurate, and try to correct any errors before you buy. If your credit score isn’t up to snuff, the easiest ways to improve it are to pay every bill on time and pay down high credit card debt.

    7. Get prequalified

    Meet with a lender to get a prequalification letter that says how much house you’re qualified to buy. Start gathering the paperwork your lender says it needs. Most want to see W-2 forms verifying your employment and income, copies of pay stubs, and two to four months of banking statements.

    If you’re self-employed, you’ll need your current profit and loss statement, a current balance sheet, and personal and business income tax returns for the previous two years.

    Consider your financing options. The longer the loan, the smaller your monthly payment. Fixed-rate mortgages offer payment certainty; an adjustable-rate mortgage offers a lower monthly payment. However, an adjustable-rate mortgage may adjust dramatically. Be sure to calculate your affordability at both the lowest and highest possible ARM rate.

    More from HouseLogic

    Learn how Fannie Mae and Freddie Mac mortgages can help you save on financing

    Learn more about the costs of homeownership

    Other web resources

    Homebuyer counseling resources

    Get a free credit report from each of the three credit reporting bureaus

  • Don't-Miss Home Tax Breaks

    Posted Under: Financing in Chicago, How To... in Chicago, Home Ownership in Chicago  |  April 9, 2014 11:14 AM  |  446 views  |  No comments

    Owning a home can pay off at tax time. 
    You might be able to take advantage of these home ownership-related tax deductions, credits, and strategies to lower your tax bill:

    Mortgage interest deduction
    Private mortgage insurance deduction
    Prepaid interest deduction
    Energy tax credits
    Vacation or second-home tax deductions
    Homebuyer tax credit repayment
    Property tax deduction

    Mortgage interest deduction

    One of the neatest deductions itemizing home owners can take advantage of is the mortgage interest deduction, which you claim on Schedule A. To get the mortgage interest deduction, your mortgage must be secured by your home — and your home can even be a house trailer or boat, as long as you can sleep in it, cook in it, and it has a toilet.

    Interest you pay on a mortgage of up to $1 million — or $500,000 if you’re married filing separately — is deductible when you use the loan to buy, build, or improve your home.

    If you take on another mortgage (including a second mortgage, home equity loan, or home equity line of credit) to improve your home or to buy or build a second home, that counts towards the $1 million limit.

    If you use loans secured by your home for other things — like sending your kid to college — you can still deduct the interest on loans up $100,000 ($50,000 for married filing separately) because your home secures the loan.

    PMI and FHA mortgage insurance premiums

    You can deduct the cost of private mortgage insurance as mortgage interest on Schedule A — meaning you must itemize your return. The change only applies to loans taken out in 2007 or later.

    By the way, the 2013 tax season is the last for which you can claim this deduction unless Congress renews it retroactively, which may happen, but is uncertain.

    What’s PMI? If you have a mortgage but didn’t put down a fairly good-sized down payment (usually 20%), the lender requires the mortgage be insured. The premium on that insurance can be deducted, so long as your income is less than $100,000 (or $50,000 for married filing separately).

    If your adjusted gross income is more than $100,000, your deduction is reduced by 10% for each $1,000 ($500 in the case of a married individual filing a separate return) that your adjusted gross income exceeds $100,000 ($50,000 in the case of a married individual filing a separate return). So, if you make $110,000 or more, you lose 100% of this deduction (10% x 10 = 100%).

    Besides private mortgage insurance, there's government insurance from FHA, VA, and the Rural Housing Service. Some of those premiums are paid at closing and deducting them is complicated. A tax adviser or tax software program can help you calculate this deduction. Also, the rules vary between the agencies.

    Prepaid interest deduction

    Prepaid interest (or points) you paid when you took out your mortgage is 100% deductible in the year you paid them along with other mortgage interest.

    If you refinance your mortgage and use that money for home improvements, any points you pay are also deductible in the same year.

    But if you refinance to get a better rate and term or to use the money for something other than home improvements, such as college tuition, you’ll need to deduct the points over the term of the loan. Say you refi for a 10-year term and pay $3,000 in points. You can deduct $300 per year for 10 years.

    So what happens if you refi again down the road?

    Example: Three years after your first refi, you refinance again. Using the $3,000 in points scenario above, you’ll have deducted $900 ($300 x 3 years) so far. That leaves $2,400, which you can deduct in full the year you complete your second refi. If you paid points for the new loan, the process starts again; you can deduct the points over the term of the loan. 

    Home mortgage interest and points are reported on IRS Form 1098. You enter the combined amount on line 10 of Schedule A. If your 1098 form doesn’t indicate the points you paid, you should be able to confirm the amount by consulting your HUD-1 settement sheet. Then you record that amount on line 12 of Schedule A.

    Energy tax credits

    If you upgraded one of the following systems last year, the energy tax credit is an opportunity for a dollar-for-dollar reduction in your tax liability: If you get the $500 credit, you pay $500 less in taxes.

    By the way, the 2013 tax season is the last for which you can claim this deduction unless Congress renews it retroactively, which may happen, but is uncertain.

    • Biomass stoves
    • Heating, ventilation, air conditioning
    • Insulation
    • Roofs (metal and asphalt)
    • Water heaters (non-solar)
    • Windows, doors, and skylights

    Varying maximums

    Some of the eligible products and systems are capped even lower than $500. New windows are capped at $200 — and not per window, but overall. Read about the fine print in order to claim your energy tax credit.

    • Determine if the system is eligible. Go to Energy Star’s website for detailed descriptions of what’s covered. And talk to your vendor.
    • The product or system must have been installed, not just contracted for, in the tax year you'll be claiming it.
    • Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.
    • File IRS Form 5695 with the rest of your tax forms.

    Vacation home tax deductions

    The rules on tax deductions for vacation homes are complicated. Do yourself a favor and keep good records about how and when you use your vacation home.

    • If you’re the only one using your vacation home (you don’t rent it out for more than 14 days a year), you can deduct mortgage interest and real estate taxes on Schedule A.
    • Rent your vacation home out for more than 14 days and use it yourself fewer than 15 days (or 10% of total rental days, whichever is greater), and it’s treated like a rental property. Those expenses get deducted using Schedule E.
    • Rent your home for part of the year and use it yourself for more than 14 days and you have to keep track of income, expenses, and divide them proportionate to how often you used and how often you rented the house.

    Homebuyer tax credit

    There were federal first-time homebuyer tax credits in 2008, 2009, and 2010.

    If you claimed the homebuyer tax credit for a purchase made after April 8, 2008, and before Jan. 1, 2009, you must repay 1/15th of the credit over 15 years, with no interest. 

    The IRS has a tool you can use to help figure out what you owe each year until it's paid off. Or if the home stops being your main home, you may need to add the remaining unpaid credit amount to your income tax on your next tax return.

    Generally, you don't have to pay back the credit if your bought your home in 2009, 2010, or early 2011. The exception: You have to repay the full credit amount if you sell your house or stop using it as primary residence within 36 months of the purchase date. Then you must repay it with your tax return for the year the home stopped being your principal residence.

    That repayment rules are less rigorous for uniformed service members, Foreign Service workers, and intelligence community workers who get sent on extended duty at least 50 miles from their principal residence.

    Members of the armed forces who served overseas got an extra year to use the first-time homebuyer tax credit. If you were abroad for at least 90 days between Jan. 1, 2009, and April 30, 2010, and you bought your home by April 30, 2011, and closed the deal by June 30, 2011, you can claim your first-time homebuyer tax credit.

    Property tax deduction

    You can deduct on Schedule A the real estate property taxes you pay. If you have a mortgage with an escrow account, the amount of real estate property taxes you paid shows up on your annual escrow statement.

    If you bought a house this year, check your HUD-1 Settlement statement to see if you paid any property taxes when you closed the purchase of your house. Those taxes are deductible on Schedule A, too.

    This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.


  • How to Claim Your Energy Tax Credits

    Posted Under: Financing in Chicago, How To... in Chicago, Home Ownership in Chicago  |  April 3, 2014 6:28 AM  |  506 views  |  No comments

    If you upgraded one or more of the following systems last year, you may be eligible to take a tax credit -- up to $500 -- on your return.

    • Biomass stoves 
    • Heating, ventilation, air conditioning 
    • Insulation  
    • Roofs (metal and asphalt) 
    • Water heaters (non-solar) 
    • Windows, doors, and skylights  

    The energy tax credits are small, but at least a credit is better than a deduction:

    • Deductions just reduce your taxable income.
    • With a credit, you get a dollar-for-dollar reduction in your tax liability: If you get the $500 credit, you pay $500 less in taxes.

    Limits on IRS energy tax credits besides $500 max

    • Credit only extends to 10% of the cost (not the 30% of yesteryear), so you have to spend $5,000 to get $500.
    • $500 is a lifetime limit. If you pocketed $500 or more in past years combined, you’re not entitled to any more money for energy-efficient improvements in the above categories. But if you took $300 back then, for example, you can get up to $200 now.
    • With some systems, your cap is even lower than $500.
    • $500 is the max for all qualified improvements combined.

    Certain systems capped below $500

    No matter how much you spend on some approved items, you’ll never get the $500 credit -- though you could combine some of these:

    System Cap
    New windows $200 max (and no, not per window—overall)
    Advanced main air-circulating fan $50 max
    Qualified natural gas, propane, or oil furnace or hot water boiler $150 max
    Approved electric and geothermal heat pumps; central air-conditioning systems; and natural gas, propane, or oil water heaters $300 max

    And not all products are created equal in the feds' eyes. Improvements have to meet IRS energy-efficiency standards to qualify for the tax credit. In the case of boilers and furnaces, they have to meet the 95 AFUE standard. EnergyStar.gov has the details.

    Tax credits cover installation — sometimes

    Rule of thumb: If installation is either particularly difficult or critical to safe functioning, the credit will cover labor. Otherwise, not. (Yes, you’d have to be pretty handy to install your own windows and roof, but the feds put these squarely in the “not covered” category.)

    Installation covered for:

    • Biomass stoves
    • HVAC
    • Non-solar water heaters

    Installation not covered for:

    • Insulation
    • Roofs
    • Windows, doors, and skylights

    How to claim the energy tax credit

    • Determine if the system you installed is eligible for the credits. Go to Energy Star's website for detailed descriptions of what’s covered; then talk to your vendor.
    • Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.
    • File IRS Form 5695 with the rest of your tax forms.

    This article provides general information about tax laws and consequences, but isn’t intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice, and remember that tax laws may vary by jurisdiction.

  • Deduction Options When You Work From Home

    Posted Under: Financing in Chicago, How To... in Chicago, Home Ownership in Chicago  |  March 26, 2014 8:16 AM  |  460 views  |  No comments

    Now, there’s an optional, simplified home office deduction: Take $5/sq. ft. up to 300 feet or $1,500 and, boom, you’re done.

    What’s the catch? Trade-off is a better word: You may not be able to deduct as much compared with the regular method. The IRS says the average home office deduction has been around $3,000. So consider the value of your time against potential tax savings if you believe you’re eligible for more than the $1,500 cap.

    Before you start spending your refund, however, there are a few rules you need to heed.

    What Counts as a Home Office?

    A room or defined area of your home that you use exclusively and on a regular basis for business and that meets either of these uses:

    • It’s your principal place of business, or
    • You see clients, customers, or patients there.

    Exception to the “exclusive” rule: If you use your home as the sole location of your business and store products there, the room or area where you store products can be used for other things. Say you use a room in your basement to make and store jewelry that’s also a TV room. If it’s the only fixed location of your business, you can use it to also watch TV.

    What If You’re on the Road a Lot?

    You don’t have to do all your work from home to take the home office deduction. If you’re an outside salesperson, you probably spend most of your work time elsewhere. But the home office has to be essential to your business, and you must spend substantial time there.  If you do your billing and other office work from your home office, and there’s no other location available to perform these functions, your home office should qualify for the deduction.

    You can also qualify for the deduction if your employer requires you to work from home, as long as you don’t charge your employer rent.

    A big catch: You must maintain the at-home office for your employer’s convenience, not your own. If you use your home office to finish reports at night or on weekends because you don’t want to work at your desk in your office downtown, you can’t claim the home office deduction.

    But if your employer doesn’t have a headquarters and everyone works remotely, you’re good to go.

    Also Covered Under the Tax Break

    Separate structures on your property, like a detached garage you’ve converted to an office or studio.

    Unlike an office inside your home, a separate structure doesn’t have to be your main place of business to qualify for a deduction. That’s because the IRS believes your family is less likely to use a separate structure as a part-time play area or den, says Mark Luscombe, principal analyst for tax and consulting at CCH. 

    Related: Check Zoning Laws Before Adding a Detached Workshop or Studio

    Two Ways to Deduct Home Office Expenses

    1. Simplified home office deduction. We talked about this one above, but there are a few other particulars to note:

    • You can’t depreciate your home office, and your deduction is limited to your gross business income less business expenses.
    • If you use this deduction, you can still claim the deductions every homeowner gets, like mortgage interest, real estate taxes, and casualty losses. Put those on Schedule A.
    • Using the standard home office deduction won’t stop you from taking the deductions for other business expenses unrelated to your home, such as advertising, supplies, and employee wages.
    • You don’t need to keep track of individual expenses with this option. You do with the actual cost method.

    2. Actual costs, which you list on Form 8829. To use this method, you figure the proportion of your home’s overall space devoted to your office and use that to calculate how much of your overall home expenses went toward your home office.

    Example: If your office is 300 sq. ft. and your home is 3,000 sq. ft., your office takes up 10% of your home. So you can deduct 10% of your utility, mortgage interest, property taxes, and other home expenses. However, certain expenses that aren’t related directly to the home office, such as lawn care, aren’t included in the calculation.

    Not sure how big your house is? Check the documents you received when you bought your home — there’s probably a detailed rendering — or measure the outside of your home and multiply length times width.

    Do You Have to Stick with the Same Deduction Method Each Year?

    Nope. Each year, you get to decide whether to use the standard or the actual-expense deduction.

    What Can You Deduct When You Use the Long Form?

    If you’re using Form 8829 to report your actual expenses and you’ve figured out what percentage of your home you use for business, you can apply that percentage to different home expenses. These include:

    • Mortgage interest
    • Real estate taxes
    • Utilities (heating, cooling, lights)
    • Home repairs and maintenance (so long as they benefit both the business and personal parts of the home)
    • Homeowners insurance premiums

    Just take each expense and multiply it by your home office percentage to get the amount you can deduct as a business expense. So if you spend $150 a month on electricity, and your home office takes up 10% of your home, you can deduct $15 a month as a home office expense. That adds up to a $180 deduction per tax year.

    Important limitation: Your home office deduction can’t exceed the amount of income you generate from the home office. So if you spend some of your work time on-site with a client and earn $1,500 there, you can’t claim more than $1,500 because it exceeds what you made at home.

    Save bills or cancelled checks to prove what you spent in case of an IRS audit. Also, only repairs, like to the furnace, can be expensed; improvements must be depreciated.

    Don’t Forget Depreciation

    Depreciation is based on the idea that everything — even something like a home — wears out eventually. If you’re using the long form, figure home office depreciation by calculating the tax basis of your home:

    1.  Add the purchase price to the cost of improvements.

    2.  Subtract the value of the land it sits on.

    3.  Multiply that cost basis by the percentage of your home used for work. This gives you the tax basis for your home office.

    4.  Divide by 39 years.

    For example:

    • Purchase price: $100,000
    • Value of land: $25,000
    • Cost basis: $75,000, plus cost of improvements you’ve made
    • Tax basis: $75,000 x 10% = $7,500
    • Depreciation deduction: $7,500/39 years*

    *Usually, depreciation deductions for a home office are figured over a 39-year period. There are caveats. For instance, if your business opened after Jan. 1 in its first year, you need to calculate a factor of 39. For a crash course, read IRS Publication 946 or talk to a tax pro.

    Keep in mind that depreciation deductions on your home office may increase the amount of profit on a home sale that’s subject to taxes. Most taxpayers don’t owe income tax on up to $250,000 of profit if you’re a single filer, $500,000 for joint filers. Consult with a qualified tax professional on how depreciation deductions affect your tax liability when you sell.

    Related: More on How Improvements Can Lower Your Cost Basis

    Special Rules for In-Home Care Providers

    If you provide in-home daycare services for children, the elderly, or disabled persons as a licensed or authorized business, you don’t have to use the home work space exclusively to take the home office deduction.

    You calculate your deduction by dividing the number of hours you used your home workspace to provide daycare services during the year by the total number of hours during the year.

    For example, if you do daycare 40 hours a week for 50 weeks a year, that’s 2,000 hours a year, divided by the 8,760 hours in a regular year equals 22.8%. So you could take 22.8% of the $5 per sq. ft. simplified deduction for your daycare workspace.

    Related: What You Should Know About Your Home and 2013 Taxes

    This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.

  • Home Deduction Traps and How to Avoid Them Read more: http://members.houselogic.com/articles/schedule-form-6-home-deduction-tr

    Posted Under: Financing in Chicago, How To... in Chicago, Home Ownership in Chicago  |  March 19, 2014 8:17 AM  |  415 views  |  No comments

    Trap #1: Line 6 - Real estate taxes

    Your monthly mortgage payment often includes money for a tax escrow, from which the lender pays your local real estate taxes.

    The money you send the bank may be more than what the bank pays for your taxes, says Julian Block, a tax attorney and author of Julian Block’s Home Seller’s Guide to Tax Savings. That will lead you to putting the wrong number on Schedule A.

    Example:

    • Your monthly payment to the lender: $2,000 for mortgage + $500 escrow for taxes
    • Your annual property tax bill: $5,500

    Now do the math:

    • Your bank received $6,000 for real estate taxes, but only paid $5,500. It may keep the extra $500 to apply to the next tax bill or refund it to you at some point, but meanwhile, you’re making a mistake if you enter $6,000 on Schedule A.
    • Instead, take the number from Form 1098—which your bank sends you each year—that shows the actual taxes paid.

    Trap #2: Line 6 - Tax calculations for recent buyers and sellers


    If you bought or sold a home in the middle of the year, figuring out what to put on line 6 of your Schedule A Form is tricky.

    Don’t simply enter the number from your property tax bill on line 6 as you would if you owned the house the whole year. If you bought or sold a house in midyear, you should instead use the property tax amount listed on your HUD-1 closing statement, says Phil Marti, a retired IRS official.

    Here’s why: Generally, depending on the local tax cycle, either the seller gives the buyer money to pay the taxes when they come due or, if the seller has already paid taxes, the buyer reimburses the seller at closing. Those taxes are deductible that year, but won’t be reflected on your property tax bill.

    Trap #3: Line 10 - Properly deducting points



    You can deduct points paid on a refinance, but not all at once, says David Sands, a CPA with Buchbinder Tunick & Co LLP. Rather, you deduct them over the life of your loan. So if you paid $1,000 in points for a 10-year refinance, you’re entitled to deduct only $100 per year on your Schedule A Form.

    Trap #4: Line 10 - HELOC limits

    If you took out a home equity line of credit (HELOC), you can generally deduct the interest on it only up to $100,000 of debt each year, says Matthew Lender, a CPA with EisnerLubin LLP.

    For example, if you have a HELOC for $200,000, the bank will send you Form 1098 for interest paid on $200,000. But you can deduct only the interest paid on $100,000. If you just pull the number off Form 1098, you’ll deduct more than you’re entitled to.

    Trap #5: Line 13 - Private mortgage insurance



    You can deduct PMI on your Schedule A Form, as long as you started paying the insurance after Dec. 31, 2006. Congress renewed the PMI deduction for 2012 and 2013 for people making less than $110,000.

    Since you're thinking about it, this is also a good time to review your PMI: You might be able to cancel your PMI altogether because your home value has risen and the amount your owe on your mortgage has gone down.

    Trap #6: Line 20 - Casualty and theft losses



    You can deduct part or all of losses caused by theft, vandalism, fire, or similar causes, as well as corrosive drywall, but the process isn’t always obvious or simple:

    • Only deduct losses that are greater than 10% of your adjusted gross income and exceed $100 (line 38 of Form 1040).
    • Fill out Form 4684, which involves complex calculations for the cost basis and fair market value.  This form gives you the number you need for line 20. 

    Bottom line on line 20: If you’ve got extensive losses, it’s best to consult a tax pro. “I wouldn’t do it myself, and I’ve been dealing with taxes for 40 years,” says former IRS official Marti.

    This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.

  • What You Should Know About Your Home and Your 2013 Taxes

    Posted Under: Financing in Chicago, How To... in Chicago, Home Ownership in Chicago  |  March 12, 2014 1:49 PM  |  411 views  |  1 comment

    These days few things start a fight on Capitol Hill faster than taxes. Despite the fact that three important tax benefits used by millions of American homeowners are days from expiring, Congress is unlikely to do anything to re-up them any time soon.

    So if you’re eligible, tax year 2013 is possibly the last time to claim the private mortgage insurance (PMI) deduction, the energy tax credit, and debt forgiveness benefit, all of which all expire on Dec. 31, 2013.

    At least there’s one piece of good news for homeowners: If you have a home office, there’s a new, simpler option for calculating the home office deduction for which you may qualify on your 2013 taxes.

    Meanwhile, here’s what you need to know about those expiring benefits as you ready your taxes:

    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 sweet little 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.

    Related: Take back your energy bills with these high-ROI energy-efficiency practices.

    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.

    New Simplified Option for the Home Office Deduction

    This may be the last year for the benefits above, but a new one kicks in for the 2013 tax year. 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.

    How much simpler is it? 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.

    Although using the simplified option is obviously easier, 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.

    Related: Which Home Office Set-Ups Qualify for a Deduction?

    Why Might the Tax Benefits Not Be Renewed?

    Although the expiring tax benefits were renewed retroactively in past years, that may not happen in 2014 because many in Congress would like to see comprehensive tax reform rather than scattershot renewals of individual provisions. This could delay a decision on the homeownership tax benefits until the big picture budget and tax issues are resolved.

    So if you can, enjoy them now!

    Related: 9 Common Tax Mistakes to Avoid

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