Real Estate in the “Fiscal Cliff” Bill

January 2nd President Obama signed the legislation that helped avoid the “Fiscal Cliff” created by Washington DC. So what was in it that pertains to real estate? Here are a few items:

Capital Gains

Capital Gains rate remains at 15 percent for those in the top rate of $400,000 (individual) and $450,000 (joint) return. After that, any gains above those amounts will be taxed at 20 percent.

  • The $250,000/$500,000 exclusion for sale of principal 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 up from 35 percent to 40 percent (exemption amounts are indexed for inflation).

Other Items

  • 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
  • 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