A Real Roadrunner
Whew. Real estate didn’t go over the fiscal cliff.
Just like the Roadrunner, a last minute Congressional dash helped avoid what could have been a disaster, when late yesterday, the U.S House of Representatives passed the Senate’s legislation to avert any further damage.
What this means to people who own or are selling real estate is:
- Mortgage debt cancellation, which was a non-taxable event under the “American Taxpayer Relief Act of 2012”, will be extended. In other words, if you sell your property as a short sale or lose it to foreclosure, you may not be taxed on the debt forgiveness. (Duplex owners should consult with their tax professionals, as part or all of your debt forgiveness may, in fact, trigger tax consequences.)
- The capital gains tax rate will remain at 15 percent for most households. Anyone earning more than $400,000-450,000 a year, however, will pay a rate of 20 percent.
- Taxes for gains on the sale of a principal residence of up to $500,000 for married couples and $250,000 for individualts remains in effect. Only homesellers who earn more than than $450,000 a year may face tax consequences on the sale of their homes.
- The tax deductions for mortgage insurance pemiums and state and local property taxes have been extended.
This is good news for a still recovering real estate market.