4 Good and 4 Painful Aspects of the Fiscal Cliff Bill Relating to Real Estate

Here are some great articles that talk about the “Fiscal Cliff” bill and how it affects Real Estate:

The good aspects of the bill are:

  1. It prevents those undergoing Short Sales more hardships by staving off their loss (difference from what they owe to the bank and the sale of the home) as personal income; hence not having to pay taxes on the “income”.
  2. An item that was brought back is the deduction of mortgage insurance premiums.
  3. There are tax incentives to make resale and new homes homes energy efficient.
  4. Inheriting individually $5 million in estate or $10 million as a family estate you are exempted from estate taxes.

The painful aspects of the bill are:

  1. For those in higher income brackets (making $400k annually or $450k jointly) the marginal federal tax rate is 39.6%,
  2. Investment real estate and home sales around the $250k and $500k ranges have a 20% rate on long term capital gains,
  3. There is a 3.8% surcharge on certain investment income from “Obamacare”, and
  4. Inheriting over individually $5 million in estate or $10 million as a family estate, you will be paying 40% in estate taxes.

There is still a major item on the table that is to come spring/summer 2013:  Mortgage Interest Deductions.  Just wonder how long this sacred cow will hold out from the slaughterhouse?