Here are some great articles that talk about the “Fiscal Cliff” bill and how it affects Real Estate:
- ‘Fiscal cliff’ bill addresses some key housing issues – Inman News
- House Passes Senate ‘Cliff’ Bill – REALTOR® Magazine
- NAR offers look at what ‘fiscal cliff’ deal means for real estate – Ohio Association of REALTORS®
The good aspects of the bill are:
- 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”.
- An item that was brought back is the deduction of mortgage insurance premiums.
- There are tax incentives to make resale and new homes homes energy efficient.
- 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:
- For those in higher income brackets (making $400k annually or $450k jointly) the marginal federal tax rate is 39.6%,
- Investment real estate and home sales around the $250k and $500k ranges have a 20% rate on long term capital gains,
- There is a 3.8% surcharge on certain investment income from “Obamacare”, and
- 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?