Wednesday, 28 December 2011

Mortgage Interest Tax Deductions Could be Eliminated in 2012

In 2012, there will be quite a few tax deductions that California tax lawyers want people to know may not be the same as this year. For instance, the tax deduction for mortgage interest was earlier on its way out for people who had high incomes. However, last year, that restriction for people with high incomes was eliminated, as lawmakers decided to focus on stabilizing the economy, and providing mortgage interest tax breaks for people with high incomes too.

In 2012, it could be a different matter altogether. Already, there is talk of bringing those restrictions on mortgage interest credits for high income groups back. California tax lawyers expect that higher income groups who take mortgages next year may find lower tax advantages than they do now. In fact, we wouldn't be too surprised if these tax breaks for certain groups of people were eliminated altogether.

For some people, the tax advantages of taking a mortgage in 2012 will be very limited.
There are other tax breaks that are on the endangered list in 2012. One of those rules is one that allows people to deduct sales taxes instead of state and local taxes. That rule is due to expire at the end of 2011. The rule is expected to be reinstated, but at this point in time, it's hard to tell whether Congress will decide to reinstate it.

Also, the home energy tax credit scheme comes to an end on December 31, 2011. If you have purchased energy-efficient fixtures for your home, including doors, Windows, heating and air-conditioning systems or skylights, you may be eligible to get 10% of the cost as an energy tax credit. The credit is for a maximum of $500.


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