S U P E R SAV E R S

Some Energy TaxCredits Are StillAvailable

An Old Credit…If you installed in your principal residence ageothermal heat pump,solar panels orwater heaters,small windenergy systems,or fuel cellsduring 2011,you can deduct30% of the coston your taxreturn. Valid for newconstruction or existinghomes, these energy creditscontinue with no cap through2016. Certain energy-efficiency restrictions apply.Known as Tax Code Section25D, this energy tax credit canbe filed using Form 5695.

A New Credit…If you missed out on making

Information Counts!Accurate, timely information adds up to savings

when making decisions about real estate. Feel free toshare this newsletter with your friends and neighbors.And thanks in advance for your referrals!

energy-efficient improve–ments in 2009 and 2010, but instead waited until 2011,you may qualify for up to 10%of their cost in tax credits.

The maximum credit in2011 is $500, and only$200 of the credit can be from installing new

windows. Note:If you’ve alreadyclaimed $500 or more inenergy-efficiencytax credits from2006 through2010, you may not claimadditional tax credits.Improvementsmust meet

energy-efficiencycriteria. Also known as Tax

Code Section 25C, use Form5695 to claim this credit.

If you qualify for energy tax credits, you may claimthem regardless whether you itemize deductions. Find more information online at the ENERGY STAR website:www.TinyURL.com/m8luk4.

A Break For Non-ItemizersWhether or not you itemize your tax return, you can

deduct qualified job-related moving expenses. What’sdeductible? Expenses you paid for packing and movinghousehold goods, storage and certain travel costs for youand your family, even shipping a car or pets — within limits (as always) and only up to theamount not reimbursed by your employer.

Be aware, one ofthe rules for takingmoving-expensedeductions is that your newworkplace must be at least 50 milesfarther from your old home than the distancebetween your old workplace and your old home. For example: If the old workplace was 15 miles from yourold home, your new workplace must be at least 65 milesfrom your old home (50 + 15 = 65).

For complete information, see IRS Publication 521,Moving Expenses.

M OV I N G E X P E N S E S

TAME YOUR TAXESHomeowner Tax Breaks Help Preserve Your Wealth

I n these challenging economic times, every penny counts. As a homeowner, you’ll want to ensureyou take all the tax deductions you’re entitled to on your 2011 return — which could keep a lot ofmoney in your own pocket.Whether you are a current or former homeowner, you’ll find this Special Tax Issue of our newsletter

offers valuable information you can use to minimize your taxes. And if you’re thinking about buying, you’llget a preview of the kinds of tax breaks you could see next year as a homeowner.

Unfortunately, some Americans lost their homes last year due to foreclosure, while others wereforced to sell at a loss in order to avoid foreclosure. If you are among them — or know someone

who is — completing a 2011 return could be more complicated than usual, but you may still qualifyfor some money-saving tax breaks.

Although we cannot provide comprehensive information for every homeowner’s unique situation, this newsletter outlines many of the major home-related federal taxrules that you’ll need to know when completing your 2011 return.

Be sure to consult a tax professional about any questions you have or call the Internal Revenue Service directly using their toll-free tax-assistanceline: (800) 829-1040. (Calling early in the tax season will reduce your wait time.) You can also find a wealth of information online — includingpublications, forms and worksheets — at www.IRS.gov.

Happy deductions!

© Gooder Group, Fairfax, VA 2012. All Rights Reserved. CHR Vol. 17, No. 1. Images © Getty Images, © PhotoDisc, © Amos Morgan.

This is not intended as a solicitation of another broker’s client or listing.

SPECIAL

TAX ISSUE

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Deduction For Mortgage InsuranceExtended Through 2011

R E NTAL H O M E S

Tax Facts ForInvestors

Whether you’ve purchaseda home as an investment oryou’ve moved on and rentedout your old home, you canreduce your taxable rentalincome by deducting rental-related expenses includinginterest, taxes, casualty losses, maintenance, utilities,insurance and depreciation —at least up to the income fromthe property.

What you might not know is that you may be able todeduct up to $25,000 inlosses from your rental real estate against incomefrom other sources. Do you qualify?

• Your adjusted grossincome (AGI) must be$100,000 or less (not countingany loss from “passive activi-ties”) and after allowableadjustments to AGI or taxableSocial Security benefits.

Tax Treatment For Those WhoLeft Or Lost Their Homes

Strategic default — walking away from your mortgagewhen you could afford to pay it — can have substantial taxconsequences. For example, if you walked away from ahome owing $250,000 on your mortgage and your lendersold the property for $150,000, the $100,000 differencemay be treated in two possible ways:

1. The lender could file a lawsuit for a “deficiency judgment,” which, if successful, would make you pay backthe $100,000. (In some states, “no-recourse” laws preventlenders from pursuing this action.)

2. The $100,000 difference could be “discharged” bythe lender, forgiving the obligation to repay. However,forgiven debt may be considered a reportable gain and betaxable as income if you cannot prove you were financiallyinsolvent when you walked away from your home. Thedownside: You could end up paying tens of thousands intaxes on “income” you never saw.

For those who truly could not afford their mortgage, andhad debt forgiven through a short sale, foreclosure, deed inlieu of foreclosure, or debt restructuring, some relief may be available. The Mortgage Forgiveness Debt Relief Act of 2007, effective through 2012, allows qualifiedtaxpayers to exclude forgiven debt from taxation,within limits.

If you had debt forgiven in 2011, you will receive Form 1098-C from the lender indicating the amountforgiven, which must be reported on your 2011 return. For particulars, see IRS Publication 4681, Canceled Debts,Foreclosures, Repossessions and Abandonments. Use IRSForm 982 to report discharged debt.

AT TE NTI O N!

Military, OthersMay Qualify For2011 Home-Buyer Tax Credit

Although the most-recentfederal home-buyer taxcredit expired for mostAmericans in 2010, qualified members ofthe U.S. uniformedservices, Foreign Serviceand intelligence commu-nity received an exten-sion into 2011.

The first-time-buyer credit isequal to 10% ofthe purchase

F O R M E R H O M E OW N E R S

Common Homeowner DeductionsMany owners qualify to take at least some of the

deductions below, allowing them to itemize their returnsand save more on taxes than by taking the standarddeduction.

• Mortgage interest for your primary residence or asecondary residence, within certain limits. See IRS Publication 936, Home Mortgage Interest Deduction.

• Property taxes. See IRS Publication 17, Your FederalIncome Tax.

• Interest on up to $100,000 of home-equity loans orlines of credit, regardless how you use the money (exceptunder the Alternative Minimum Tax). You can also deductinterest on equity-backed loan amounts above $100,000 ifyou use the money to improve your home. (These limitsapply so long as all debt secured by the residencedoes not exceed the home’s fair marketvalue.) See IRS Publication 936.

• Loan-discount points may bededucted either in the year they werepaid or on a prorated basis over thelife of the loan, providing a number of rules are met. This gets compli-cated — be sure to consult Publication936 or a tax specialist for all the particulars.

TH E B I G P I CTU R E

If your AGIis between$100,000 and $150,000,you may beable to deductsome or all ofyour lossesfrom rental real estate,depending onthe amount of the loss.

• You must own at least10% of the property and“actively participate” in itsmanagement. (If you chose the tenants and approvedoutlays for maintenance, forexample, that’s considered“active” participation.)

• If losses from rental property were suspended inprior years, they are fullydeductible in the year theproperty is sold.

Want to learn more? Checkout IRS Publication 527, Residential Rental Property(Including Rental of VacationHomes).

price up to an$8,000 credit

($4,000 if marriedfiling separately)for purchaserswho did notown a primary

home in the three years prior to

closing/settlementon the new home.

The long-term-owner credit is

10% of thepurchase

The deduction for mort-gage insurance premiums hasbeen extended to include taxyear 2011. The law allows fulldeductibility of premiums

paid for mortgage insurancecertificates issued

from January 1, 2007through December

31, 2011, withthese rules:

• Taxpayersmust itemizetheir returns.

• Premiumsare fully deductible

for taxpayers withadjusted gross

income (AGI) up to$100,000 (exceptmarried filing separatelywhere the limit is AGI$50,000 per person). The deduction is reduced

by 10% for each $1,000AGI above $100,000 (or 10% for each $500 AGI above $50,000 for

married filing separately). So, for most taxpayers, nodeduction is available if AGI is more than $109,000. Formarried filing separately, thededuction disappears for AGIs above $54,500.

• The deduction applies to home-purchase loans, and to refinanced loans up to the original acquisition-loan amount.

• The residence must be thetaxpayer’s principal residenceor a qualified second home.

• Generally, lump-sumpremiums paid for insurancebeyond one year of coveragecannot be deducted in full forthe year they are paid. Thepremium must be amortizedover the number of years thesum is allocated.

For more information ondeducting mortgage insurancepremiums, see IRS Publication936, Home Mortgage InterestDeduction.

AF TE R MATH

Dealing With DestructionIf you lost property in 2011 due to an accident, storm, fire,

flood, drought or other unforeseen occurrence, you may not haveto report insurance proceeds if you replace the property within a specified time. Additionally, if the home was located in a federally declared disaster area, you can claim the loss on yourtax return in the year of the loss (2011) or for the preceding year.Local and state property taxes may also be abated in some cases.Consult IRS Publication 547, Casualties, Disasters, and Thefts tofind out more.

Tax Tip!If you purchased a home

in 2011 and the seller paid loan-discount points on yourbehalf, you may treat thosepoints as though you paidthem, and deduct them

if all requirementsare met.

price up to $6,500 ($3,250 if married filing separately) for buyers who owned andused a principal residence for any consecutive five-yearperiod during the eight yearsprior to the new homepurchase.

To qualify for the 2011extended credit,purchasers must have:

• Served on qualifiedextended duty outside theUnited States for at least 90days after December 31, 2008and before May 1, 2010.

• Signed a binding contract to purchase a home

by April 30, 2011 and closed/settled by June 30, 2011.

• Purchased a home with a purchase price of no morethan $800,000.

• Modified adjusted grossincome (MAGI) of no morethan $125,000 for single filers to receive the full credit(credit phases out for incomesbetween $125,000 and$145,000) or MAGI up to$225,000 for married jointfilers to get the full credit(phase-out up to $245,000).

To claim the credit,complete Form 5405 andinclude supporting documen-tation, such as a copy of thesettlement/closing statement.(Returns must be mailed rather than e-filed.)

There’s more! For completerules, see IRS Instructions forForm 5405, available online atwww.TinyURL.com/yaafdy4.

Happy New Year!We hope you’ll call on us in 2012 for all your real estate

needs — you'll find our contact information on Page 1. Whether you’re just looking for information or you’re ready to

buy or sell a home, we’re ready to assist you in any way we can.

O N E M O R E Y EAR

Yet AnotherDeduction

You may treat asmortgage interest — and take a deduction for — latepayment charges on yourmortgage if they are not for a specific service performedin connection with yourmortgage loan. You can alsotreat a mortgage prepaymentpenalty as interest, anddeduct it, if the penalty is not for a specific serviceperformed or cost incurred inconnection with your loan.

Why Is 2012 Tax Day On Tuesday, April 17?

This year, April 15 is on a Sunday, and April 16 isEmancipation Day, a legal holiday in Washington D.C.

be taxable as income if youcannot prove you were finan-cially insolvent when youwalked away from your home.The downside: You could endup paying tens of thousands in taxes on “income” younever saw.

For those who truly couldnot afford their mortgage, andhad debt forgiven through ashort sale, foreclosure, deed in lieu of foreclosure, or debtrestructuring, some relief maybe available. The MortgageForgiveness Debt Relief Act of2007, effective through 2012,allows qualified taxpayers toexclude forgiven debt fromtaxation within limits.

For particulars, see IRSPublication 4681, CanceledDebts, Fore-closures,Reposses-sions andAbandon-ments. UseIRS Form982 to reportdischargeddebt.

FORMER HOMEOWNERS

Tax TreatmentFor Those WhoLeft Or Lost TheirHomes In 2011

Strategic default — walkingaway from your mortgagewhen you could afford to payit — can have substantial taxconsequences. For example, if you walked away from ahome owing $250,000 on yourmortgage and your lender soldthe property for $150,000, the$100,000 difference may betreated in two possible ways:

1. The lender could file alawsuit for a “deficiency judgment,” which, if success-ful, would make you pay back the $100,000. (In somestates, “no-recourse” lawsprevent lenders from pursuingthis action.)

2. The $100,000 differencecould be “discharged” by thelender, forgiving the obliga-tion to repay. However,forgiven debt may be consid-ered a reportable gain and

Why Is 2012 Tax Day On Tuesday, April 17?

Because April 15 falls on a Sunday this year, and April 16 is Emancipation Day, a legal holiday in Washington D.C.

Information Counts!Accurate, timely information adds

up to savings when making mortgagedecisions. Feel free to share thisnewsletter with your friends and neighbors.And thanks in advance for your referrals!

Dealing WithDestruction

If you lost property in 2011due to an accident, storm, fire, flood, drought or otherunforeseen occurrence, youmay not have to report insur-ance proceeds if you replacethe property within a speci-fied time. Additionally, if thehome was located in a feder-ally declared disaster area, you can claim the loss on

AFTERMATH your tax return in the year of the loss (2011) or for thepreceding year. Local and state property taxes may alsobe abated in some cases.Consult IRS Publication 547,Casualties, Disasters, andThefts to find out more.

I n these challenging economic times, every penny counts.As a homeowner, you’ll want to ensure you take all thetax deductions you’re entitled to on your 2011 return —

which could keep a lot of money in your own pocket.Whether you are a current or former homeowner, you’ll

find this Special Tax Issue of our newsletter offers valuableinformation you can use to minimize your taxes.

And if you’re thinking about buying, you’ll get apreview of the kinds of tax breaks you could

see next year as a homeowner.

Unfortunately, some Americans lost their homes lastyear due to foreclosure, while others were forced to sell at aloss in order to avoid foreclosure. If you are among them —or know someone who is — completing a 2011 return could be more complicated than usual, but you may still qualify forsome money-saving tax breaks.

Although we cannot provide comprehensive informationfor every homeowner’s unique situation, this newsletteroutlines many of the major home-related federal tax rulesthat you’ll need to know when completing your 2011 return.

Be sure to consult a tax professional about any questionsyou have or call the Internal Revenue Service directly using their toll-free tax-assistance line: (800) 829-1040.(Calling early in the tax season will reduce your wait time.)You can also find a wealth of information online — including

publications, forms and worksheets — at www.IRS.gov.

Happy deductions!

SPECIAL

TAX ISSUEBREAK AWAY!

Your Advantage As A Homeowner: Great Tax Breaks For 2011© Gooder Group, Fairfax, VA 2012. All Rights Reserved. MLL Vol. 14, No. 1.

Images © Getty Images, © Photodisc, © Comstock, © Stockbyte, © George Doyle, © Ryan McVay.

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CURRENT RATES

FOR MORTGAGE

Tax Facts ForInvestors

Whether you’ve purchaseda home as an investment oryou’ve moved on and rentedout your old home, you canreduce your taxable rentalincome by deducting rental-related expenses includinginterest, taxes, casualty losses, maintenance, utilities,insurance and depreciation —at least up to the income fromthe property.

Deduction For Mortgage InsuranceExtended Through 2011

The deduction for mortgage insurance premiums has been extended to include tax year 2011. The law allows fulldeductibility of premiums paid for mortgage insurance certifi-cates issued from January 1, 2007 through December 31, 2011,with these rules:

•• Taxpayers must itemize their returns.•• Premiums are fully deductible for taxpayers with adjusted

gross income (AGI) up to $100,000 (except married filing sepa-rately where the limit is AGI $50,000 per person). The deductionis reduced by 10% for each $1,000 AGI above $100,000 (or 10%for each $500 AGI above $50,000 for married filing separately).So, for most taxpayers, no deduction is available if AGI is morethan $109,000. For married filing separately, the deduction disappears for AGIs above $54,500.

•• The deduction applies to home-purchase loans, and to refinanced loans up to the original acquisition-loan amount.

•• The residence must be the taxpayer’s principal residence ora qualified second home.

•• Generally, lump-sum premiums paid for insurance beyondone year of coverage cannot be deducted in full for the year theyare paid. The premium must be amortized over the number ofyears the sum is allocated.

For more information on deducting mortgage insurancepremiums, see IRS Publication 936, Home

Mortgage Interest Deduction.

Military, Others May Qualify For2011 Home-Buyer Tax Credit

Although the most-recentfederal home-buyer tax creditexpired for most Americans in 2010, qualified members ofthe U.S. uniformed services,Foreign Service and intelli-gence community received anextension into 2011.

The first-time-buyer credit is equal to 10% of the purchaseprice up to an $8,000 credit($4,000 if married filing sepa-rately) for purchasers who did

not own a primary home in the three years prior to closing/settlement on the new home. The long-term-owner credit is10% of the purchase price up to $6,500 ($3,250 if married

ONE MORE YEAR

Late-PaymentDeduction

You may treat asmortgage interest — andtake a deduction for —late payment charges onyour mortgage if they arenot for a specific serviceperformed in connectionwith your mortgage loan.

You can also treat amortgage prepaymentpenalty as interest, anddeduct it, if the penaltyis not for a specificservice performed or costincurred in connectionwith your loan.

A Break ForTaxpayers WhoDon’t Itemize

Whether or not you item-ize your tax return, you candeduct qualified job-relatedmoving expenses. What’sdeductible? Expenses you paid for packing and movinghousehold goods, storage andcertain travel costs for youand your family, even ship-ping a car or pets — withinlimits (as always) and only upto the amount not reimbursedby your employer.

Be aware, one of the rulesfor taking moving-expensedeductions is that your newworkplace must be at least 50 miles farther from your old home than the distancebetween your old workplaceand your old home. For exam-ple: If the old workplace was15 miles from your old home,your new workplace must beat least 65 miles from your oldhome (50 + 15 = 65).

For complete infor-mation, see IRSPublication521, MovingExpenses.

MOV ING EXPENSES

Happy New Year!We hope you’ll call on us

in 2012 for all your mortgageneeds — you’ll find our contact

information on Page 1. Whetheryou’re just looking for information or

you’re ready to buy a home, refinance one ortap your home’s equity, we're ready to assist you in

any way we can.

RENTAL HOMES What you might not knowis that you may be able todeduct up to $25,000 in lossesfrom your rental real estateagainst income from othersources. Do you qualify?

•• Your adjusted grossincome (AGI) must be$100,000 or less (not countingany loss from “passive activi-ties”) and after allowableadjustments to AGI or taxableSocial Security benefits. Ifyour AGI is between $100,000and $150,000, you may beable to deduct some or all ofyour losses from rental realestate, depending on theamount of the loss.

•• You must own at least10% of the property and“actively participate” in itsmanagement. (If you chosethe tenants and approvedoutlays for maintenance, forexample, that's considered“active” participation.)

•• If losses from rental property were suspended inprior years, they are fullydeductible in the year theproperty is sold.

Want to learn more? Check out IRS Publication527, Residential Rental Property (Including Rental ofVacation Homes).

ATTENT ION ! filing separately) for buyers who owned and used a principalresidence for any consecutive five-year period during the eightyears prior to the new home purchase.

To qualify for the 2011 credit, purchasers must have:•• Served on qualified extended duty outside the U.S. for at

least 90 days after December 31, 2008 and before May 1, 2010. •• Signed a binding contract to purchase a home by

April 30, 2011 and closed/settled by June 30, 2011.•• Purchased a home with a purchase price of no more

than $800,000.•• Modified adjusted gross income (MAGI) of no more than

$125,000 for single filers to receive the full credit (creditphases out for incomes between $125,000 and $145,000) orMAGI up to $225,000 for married joint filers to get the fullcredit (phase-out up to $245,000).

To claim the credit, complete Form 5405 and includesupporting documentation, such as a copy of the settlement/closing statement. (Returns must be mailed rather than e-filed.)

There’s more! For complete rules, see IRS Instructions forForm 5405, available online at www.TinyURL.com/yaafdy4.

Energy TaxCredits

An Old Credit...If you installed in

your principal residencea geothermal heat pump,solar panels or waterheaters, small windenergy systems, or fuelcells during 2011, youcan deduct 30% of thecost on your tax return.Valid for new construc-tion or existing homes,these energy creditscontinue with no capthrough 2016. Certainenergy-efficiency restric-tions apply. Known asTax Code Section 25D,this energy tax credit canbe filed using Form 5695.

A New Credit...If you missed out on

making energy-efficientimprovements in 2009and 2010, but insteadwaited until 2011, youmay qualify for a taxcredit of up to 10% ofthe cost of qualifiedimprovements. Themaximum credit in 2011is $500, and only $200 of the credit can be frominstalling new windows.Note: If you’ve alreadyclaimed $500 or more in energy-efficiency tax credits from 2006through 2010, you maynot claim additional taxcredits. Improvementsmust meet energy-efficiency criteria. Alsoknown as Tax CodeSection 25C, use Form5695 to claim this credit.

If you qualify forenergy tax credits, you may claim themregardless whether youitemize deductions. Find more informationonline at the ENERGYSTAR website:www.TinyURL.com/m8luk4.

Common Tax DeductionsFor Homeowners

Many owners qualify to take at least someof the deductions below, allowing them toitemize their returns and save more on taxesthan by taking the standard deduction.

•• Mortgage interest for your primary residence or a secondary residence, withincertain limits. See IRS Publication 936, Home Mortgage Interest Deduction.

•• Property taxes. See IRS Publication 17,Your Federal Income Tax.

•• Interest on up to $100,000 of home-equityloans or lines of credit, regardless how you use the money. You can also deduct interest on equity-backed loan amountsabove $100,000 if you use the money to improve your home. (These limitsapply so long as all debt secured by the residence does not exceed thehome’s fair market value.) See IRSPublication 936.

•• Loan-discount points may bededucted either in the year they were paid or on a prorated basis over the life of the loan, providing anumber of rules are met. This getscomplicated — be sure to consult Publication 936 or a tax specialist for all the particulars.

THE B IG P ICTURE

TAX TIP!If you purchased a home

in 2011 and the seller paidloan-discount points on

your behalf, you may treatthose points as though

you paid them, and deductthem if requirements

are met.