The Bipartisan Budget Act of 2018 (BBA) retroactively extended a number of tax provisions through 2017 for individual taxpayers. Let’s take a look at five of them.
1. Mortgage Insurance Premiums
Homeowners with less than 20 percent equity in their homes are required to pay mortgage insurance premiums (PMI). For taxpayers whose income is below certain threshold amounts, these premiums were deductible in tax years 2013, 2014, 2015, 2016 and now, once again in 2017. Mortgage insurance premiums are reported on Schedule A (1040), Itemized Deductions, under “Interest You Paid.”
2. Exclusion of Discharge of Principal Residence Indebtedness
Typically, forgiven debt is considered taxable income in the eyes of the IRS; however, this tax provision was retroactively extended through 2017. Homeowners whose homes have been foreclosed on or subjected to short sale are able to exclude from gross income up to $2 million of canceled mortgage debt.