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Roth IRA Conversions are very popular now. You pay regular tax now on the amount converted (no penalties), but do not pay tax on it later when you take it out to spend. Younger people usually benefit the most from this long-term tax savings plan.
Principal Residence Foreclosure and Short-Sales
New tax laws were passed to address some of these problems. The Mortgage Forgiveness Debt Relief Act allows you to exclude from income up to $2 million of certain home mortgage debt that has been forgiven. This rule is extended through 2012. It only applies to loans taken out to purchase your primary residence. Home-equity loans used to consolidate bills or buy other items does not qualify for this exclusion.
Other types of Cancelled Debt
Debts cancelled on property that is not your principal residence can still result in taxable income on your tax return. This cancellation of debt income can arise from a foreclosure, or short-sales on any property that is not your principal residence. The bank will usually issue a form 1099-Cancellation for this.
Residential Energy Savings Tax Credits
These tax credits, again are offered for residential Energy Saving home improvements.
They include: New doors and windows, Insulation, central air, roofs, furnace and tankless water heaters and Solar panels. The tax credit varies depending on which item(s)you installed.
Home Mortgage Interest Deduction Limitation
The mortgage interest deduction is limited to loan amounts up to $1 million on home acquisition loans. The interest on loan amounts above $1,000,000 is not tax deductible. An additional interest deduction is allowed for the interest on up to a $100,000 home equity loan.
The Hybrid Vehicle Tax Credit is still available for only a few select Alternative Fuel vehicles. Please bring your Hybrid car purchase contract with you to see if you qualify.
The purchase of an Electric driven motor vehicle may be eligible for tax credit of up to $7,500. The date purchased & number of cars sold nationwide will help determine the amount of credit you are eligible for.
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