IRS Updates Safe Harbor Guidance on Distressed Homeowners' Deductions

Mortgage servicers can list the amount of payments they have received from programs designed to assist homeowners facing a possible foreclosure as tax-deductible items on the owners' Forms 1098 without fear of penalty, IRS says in safe harbor guidance. In Notice 2013-7, IRS says the guidance will continue to allow homeowners to deduct an amount equal to the sum of all mortgage payments made during a year to a mortgage servicer, HUD, or a state housing finance agency up to the total amount of mortgage interest, insurance premiums, and real property taxes paid. The announcement follows extension of mortgage relief provisions in the American Taxpayer Relief Act. As part of its ATRA guidance following Jan. 2 enactment of fiscal cliff legislation, IRS issues Notice 2013-8 with procedures for the retroactive application of transit benefits, which increase from $125 per month to $240 per month.

Try Daily Tax Report now