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 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.
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).
- 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