The omnibus appropriations bill, which is a $1.1 trillion bipartisan spending bill that includes the extension of several tax relief provisions, was signed into law late last week. The bill includes a standalone proposal sponsored by U.S. Rep. Tom Reed (R-New York) known as the Mortgage Relief Assistance Act.
“I applaud the US Congress and President Obama for supporting the omnibus appropriations bill,” said Ed Delgado, Five Star Institute President and CEO. “In addition to ensuring that the government will not shut down in the new year, the bill is very important to the nation’s homeowners with the inclusion of the Mortgage Relief Assistance Act. This act extends a provision allowing homeowners to exclude forgiven mortgage debt from their gross income when filing tax returns.”
According to the National Association of Home Builders (NAHB), the forgiven mortgage debt exemption is expected to save homeowners about $3.3 billion for the tax year 2015.
Another provision of the omnibus bill allows homeowners to consider mortgage insurance premiums paid as mortgage interest, thus allowing them to include the paid premiums as a tax deduction (same for FHA, RHA, and VA insurance premiums paid in addition to private mortgage insurance premiums). NAHB says this deduction is expected to save homeowners approximately $1.3 billion for the tax year 2015. Both the exclusion of forgiven mortgage debt provision and the premium deduction for mortgage insurance will be extended through the end of 2016.
“It is essential that the mortgage industry continue to work closely with the current and future administration to assist homeowners that are experiencing financial difficulties, which preclude their ability to maintain a current mortgage status," Delgado said.
Editor's Note: The Five Star Institute is the parent company of DS News and DSNews.com.