Tax 2007: New Benefits for Homeowners

Foreclosure Benefit: Before 2007, taxpayers often owed income tax on the value of their home loan after that loan was cancelled through a foreclosure proceeding, otherwise known as "cancellation of indebtedness income." But now homeowners who went through foreclosure in 2007 have Congress to thank for the Mortgage Forgiveness Debt Relief Act of 2007. So, for 2007 tax return, if you had cancellation of indebtedness income on your principal residence (Note: Not investment property), the first $2 million goes income-tax free. For more details, visit IRS webpage on this topic.

Mortgage Insurance Benefit: If you purchased mortgage insurance contract for a home loan in 2007, you may be able to deduct your premiums. You must itemize to take this perk. If you qualify, the value of your insurance premiums is treated as deductible mortgage interest. The benefit starts phasing out if adjusted gross income exceeds $100,000. For more details, visit IRS webpage on this topic.