Cliff (noun): a very steep, vertical, or overhanging face of rock, earth, or ice : precipice.
If you’re as tired as I am hearing about the “Fiscal Cliff,” here’s a quick summary of changes in the law that affect property owners. This information was collected by our very own National Association of Realtors.
Mortgage Cancellation Relief is extended until January 1st, 2014. If you do a “short sale” and sell your home for less than you owe, you will not be taxed on the amount of the mortgage debt forgiveness (the amount you were short). This is very good news, because it’s tough paying taxes on money that you don’t have.
Deductions for Mortgage Insurance Premiums, for filers making under $110,000, is extended through 2013 and is retroactive for 2012.
The Energy Efficiency Tax Credit of 10% – for up to $500 of improvements – was extended through 2013 for improvements to EXISTING homes. (This is the Federal credit. The State of Maryland also offers other credits for various energy efficient improvements to your home.)
The Capital Gains Tax Rate stays at 15% for those making under $400k to $450k. After that tax rate is now 20%. The $250k (single filer) or $500k (married filer) exclusion for the sale of a single family primary residence is still in place.
Federal Estate Tax: The first $5 million in personal estates and $10 million in family estates are now exempt from estate taxes. After that the estate tax rate is 40%. (Ouch! Plan accordingly!)
Hopefully some of these tax breaks will help as you prepare your 2012 taxes and pack your parachute – just in case we go over a cliff!
Laura Kittleman is the owner of The Kittleman Group of Keller Williams Select Realtors, based in Ellicott City, MD. She can be reached at 301-785-5889 or firstname.lastname@example.org