Fiscal Cliff Tax Bill Good for Magnolia TX Real Estate
On January 1, 2013 both the Senate and House passed H.R. 8 legislation to avert the “fiscal cliff.” The bill will be signed shortly by President Barack Obama.
Below is a summary of real estate related provisions in the bill as summarized by the National Association of Realtors:
Real Estate Tax Extenders
- 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
Permanent Repeal of Pease Limitations for 99% of Taxpayers
Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers. These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000. These thresholds have been increased and are indexed for inflation and will rise over time. Under the formula, the amount of adjusted gross income above the threshold is multiplied by three percent. That amount is then used to reduce the total value of the filer’s itemized deductions. The total amount of reduction cannot exceed 80 percent of the filer’s itemized deductions.
These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years. They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012. Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.
Capital Gains rate stays 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 principle 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 40 percent, up from 35 percent. The exemption amounts are indexed for inflation.
Whether you are new to the Magnolia Texas real estate market, thinking of moving up, or you’re an experienced investor, Pam Sitterly has the expertise, proven track record, and resources to help you buy Magnolia TX real estate for sale or market Magnolia TX homes for sale. Enthusiasm, knowledge of the area and personal concern for her client’s interests combine to make Pam an outstanding resource for your real estate transactions.
Pam works extensively to help Buyers and Sellers meet their Magnolia Texas real estate goals. For more information about buying or selling your Magnolia TX home, please call Pam at 281-723-0324 or via email with this convenient contact form.