Unless you’ve been living under a rock, you’ve probably heard about the $700 billion bailout plan that was passed recently in an attempt to rescue the housing market.  What you may not know is that there were several tax relief provisions included in this bill.

Included in the bill were some new tax credits, and some other tax bills that were set to expire were extended.

Here’s a quick summary of the tax breaks found in the bailout bill:

Mortgage debt forgiveness - under previous tax law, if you had any debt forgiven, the cancelled debt was taxable income to you.  The new law temporarily stops homeowners from owing tax on cancelled debt up to $2 million.  The debt has to be related to your primary residence.  This is actually an extension on a law that was set to expire; the new law will extend this provision until 2012.

Lower property taxes - homeowners who don’t itemize their deductions will be able to deduct up to $500 ($1,000 for joint taxpayers) of personal property taxes in addition to the standard deduction.  This is effective for 2008 and 2009.

Continue Reading Bailout Plan Includes Tax Breaks Too

In recognition of recent gasoline price increases, the IRS has raised the standard mileage rate for the final six months of 2008.

The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through December 31, 2008. The rate for the first half of 2008 is 50.5 cents.

The IRS normally updates the mileage rates once a year, but given the significant increases in gas prices this year, the IRS has made a special rate increase in the middle of the year.