The following post on Windermere?s blog is worth a read if you like to stay on top of the real estate market:
How new finance legislation affects home owners, buyers and sellers
Posted in Market News by Edward Krigsman
Many home owners, buyers, and sellers have been carefully watching the new federal finance package passed on January 1, 2013 by both the U.S. House of Representatives and the Senate. This is because it included automatic tax increases as well as federal spending cuts that involve real estate programs.
Many important real estate programs were extended, albeit for a limited time. Therefore homeowners, buyers and sellers should pay attention to these new time periods when planning financially.
Components of the legislation most likely to impact real estate decisions:
?Capital gains tax exclusions for sale of a principal residence remain in place. This benefit protects up to $500,000 of capital gain ($250,000 for individual filers). However, home sellers with incomes of $450,000 ($400,00 for individual filers) or above and where the gain on the sale of their home is above $500,000 will now pay taxes on the excess capital gains at a higher tax higher rate.
?Key provisions of the Mortgage Debt Relief Act are extended through January 1, 2014. This provides financial relief in the form of lower taxes for home owners or sellers who have a portion of their mortgage debt forgiven by their lender. For sellers, this forgiveness occurs through a form of a short sale or foreclosure. For home owners, this relief comes in the form of a loan modification.
Without this extension, any debt forgiven would become taxable. Home buyers will benefit from this extension since it will likely result in a greater number of short sales and foreclosures being available for sale, as underwater sellers are more incentivized.
?Deductions for mortgage insurance for filers earning below $110,000 are extended to through 2013. Mortgage insurance?usually paid for by home buyers?allows home buyers who have less money to put down to qualify for better loans. Home buyers with qualified residences will be able to continue to deduct the cost of this mortgage insurance. This benefit is also retroactive through 2012.
?The 10 percent tax credit for energy improvements to existing homes is extended through 2013. This credit, which is limited to $500, applies to existing homes and is also retroactive through 2012.
Source: http://bainbridgeagent.com/legislative-changes-impacts-on-homeowners-sellers-and-buyers/
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