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Automatic Federal Tax Conformity for Important Homeownership Provisions
Each year, the Minnesota Legislature reviews tax legislation enacted at the federal level and determines which of those provisions should be passed along to Minnesota taxpayers for state tax purposes.
Two key provisions beneficial to homeowners in recent federal tax conformity bills are:
· Mortgage debt cancellation tax relief
· Mortgage insurance premium deductibility
Unfortunately, if these tax benefits are extended after Minnesota’s Legislative Session is adjourned or federal conformity legislation is not signed into law by the Governor, these important federal tax benefits for homeowners are not immediately passed along for state tax purposes.
1. Senate File 824 / House File 1086 would provide for automatic state tax conformity for two homeownership provisions whenever those provisions are extended at the federal level.
2. Mortgage debt cancellation tax relief provides relief to homeowners who have had some portion of their mortgage debt forgiven by a lender through a short sale, foreclosure, or a principal reduction, relief from having that forgiven debt treated as “income” and taxed.
3. Mortgage insurance premium deductibility helps homeowners, often first-time homeowners who had to purchase mortgage insurance because they were not able to make at least a twenty-percent down-payment, by allowing them to deduct the premiums from their taxes.
SF 824-Senators Draheim and Rest
HF 1086-Representatives Anderson, S., Davnie, Hertaus and Marquart
Issue specifics and bill language are subject to change.*