NAR Government Affairs summary of “fiscal cliff” legislation as passed by the House and the Senate. UPDATE: President Barack Obama has signed the agreement into law.
Real Estate Provisions in “Fiscal Cliff” Bill
On Jan. 1 both the Senate and House passed H.R. 8, legislation to avert the “fiscal cliff.” The bill will be signed shortly by President Barack Obama.
Below is a summary of real estate related provisions in the bill:
Real Estate Tax Extenders
• Mortgage Cancellation Relief is extended for one year to Jan. 1, 2014
• Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012
• 15 year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.
• The 10 percent tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.
Permanent Repeal of Pease Limitations for 99% of Taxpayers
Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers. These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000. These thresholds have been increased and are indexed for inflation and will rise over time. Under the formula, the amount of adjusted gross income above the threshold is multiplied by three percent. That amount is then used to reduce the total value of the filer’s itemized deductions. The total amount of reduction cannot exceed 80 percent of the filer’s itemized deductions.
These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years. They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012. Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.
Capital Gains
The Capital Gains rate stays at 15 percent for those at the top rate of $400,000 (for individuals) and $450,000 (for those filing a joint return). After that, any gains above those amounts will be taxed at 20 percent. The 250/500k exclusion for sale of principle residence remains in place.
Estate Tax
The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax. After that the rate will be 40 percent, up from 35 percent. The exemption amounts are indexed for inflation.
Great News!
[...] Alternatively you can read a summary published by the National Association of Realtors this morning here; http://speakingofrealestate.blogs.realtor.org/2013/01/02/house-passes-senate-cliff-bill/ [...]
Phew! I was supposed to close the short sale of my personal residence Monday, December 31, 2012, but it is now being delayed to “probably” 5 more business days. I hope the Congress does not change its mind before then!
Wish me well.
JR
[...] House Passes Senate ‘Cliff’ Bill On January 2, 2013, in Breaking News, Politics & Government, by Robert Freedman More Sharing Serviceshare on twitterShare on facebookShare on emailShare on print [...]
[...] House Passes Senate ‘Cliff’ Bill NAR Government Affairs summary of “fiscal cliff” legislation as passed by the House and the Senate. [...]
[...] You can read the blog summary with updates over on the National Association of Realtors website here. [...]
[...] You can read the blog summary with updates over on the National Association of Realtors website here. [...]
[...] You can read the blog summary with updates over on the National Association of Realtors website here. [...]
[...] See House Passes Senate ‘Cliff’ Bill [...]
[...] To read more specifics on the cliff bill and what it may mean for you real estate-wise, read this wonderful post from Realtor.org;s blog: http://speakingofrealestate.blogs.realtor.org/2013/01/02/house-passes-senate-cliff-bill/ [...]
[...] You can read the blog summary with updates over on the National Association of Realtors website here. [...]
[...] million of family estates may be exampt from the estate taxRead more about the Fiscal Cliff Bill here or contact Lang Premier Properties to have all of your real estate questions answered.Lang Premier [...]
[...] Congress heard the voice of the real estate industry! With the passing of the bill that averted the “fiscal cliff,” Congress made several concessions that are quite favorable toward the housing industry. Included in the bill are a number of real estate tax breaks and credits that most notably include a year-long extension of mortgage cancellation relief for homeowners and sellers, a deduction for mortgage insurance premiums for filers making below $110,000, as well as a 10 percent tax credit for energy improvements to existing homes. In addition, there are only minimal changes to the tax exclusion for gains on the sale of a principal residence. To read the full summary from the National Association of Realtors, Click Here [...]
[...] You can read the blog summary with updates over on the National Association of Realtors website here. [...]
[...] You can read the blog summary with updates over on the National Association of Realtors website here. [...]
[...] read the full summary from the National Association of Realtors, click here. Filed Under: Featured Blog Posts Tagged With: Berkeley Heights, Buyers, Buying a home, Fiscal [...]
[...] Alternatively you can read a summary published by the National Association of Realtors this morning here; http://speakingofrealestate.blogs.realtor.org/2013/01/02/house-passes-senate-cliff-bill/ [...]