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Some temporary relief, but with much more to resolve...

Some temporary relief, but with much more to resolve…

Ok, so we have some answers to some of the questions we were facing concerning real estate issues.  I am sure you probably have heard the major points, so I won’t go into all the details.  Here is the link to the official White House Summary of the bill:  http://www.whitehouse.gov/the-press-office/2013/01/01/fact-sheet-tax-agreement-victory-middle-class-families-and-economy

The main topics I want to point out are:

1. The income levels of $400,000 and $450,000 (for individuals and married couples filing jointly, respectively) refer to “taxable income” which means after expenses and deductions.

2. This also is for income received in 2013, so this does not affect people’s 2012 tax returns that are due April 15, 2013.  It will affect the returns due April 15th, 2014.

short sale

3. The Mortgage Debt Relief Act (see my earlier post from October 8, 2012 http://realestatebizexpert.com/2012/10/08/congress-needs-to-act-now-to-save-short-sales/) was extended for 1 year, until December 31, 2013.  This is terrific news for Realtors and sellers of short sale properties.

4. The Mortgage Interest Deduction was left untouched, at least for now.  I suspect that it will be a target when Congress resumes conversations about cutting expenses…

5.  The 3.8% Capital Gain tax that was buried in the Obamacare health bill remains, and will affect people starting this year.

6. Other Capital Gain taxes remain at 15%, except for those earning more than $400,000 (individual) or $450,000 (married filing jointly).

I am very happy to see the extension of the Mortgage Debt Relief Act for another year; this will help clear the decks of more shortsales faster!  As far as the other issues, I believe the Mortgage Interest Deduction is a huge target for the President and Congress, so I am not optimistic about its likely future.