Senate Approves Mortgage Deduction and Debt Relief

The U.S. Senate has passed S. 2260, a bill that covers a deduction for mortgage interest premiums and mortgage debt relief.

As part of the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act, homeowners will be able to deduct the cost of mortgage insurance. According to the bill, “The deduction is phased-out ratably by 10 percent for each $1,000 by which the taxpayer’s AGI exceeds $100,000. Thus, the deduction is unavailable for a taxpayer with an AGI in excess of $110,000. The bill extends this provision for two additional years, through 2015. A two year extension of this provision is estimated to cost $1.8 billion over 10 years.”

The bill also covers mortgage debt relief.

“Under current law, taxpayers who have mortgage debt canceled or forgiven after 2013 may be required to pay taxes on that amount as taxable income,” S. 2260 stated. “Under this provision, up to $2 million of forgiven debt is eligible to be excluded from income ($1 million if married filing separately) through tax year 2015.”

The bill passed 76 to 16; the House of Representatives passed the bill by 387 to 46 two weeks ago, and President Obama is expected to sign the EXPIRE Act into law.