Good Afternoon and Happy New Year-

Those of us who believe in home ownership and real estate as a sound investment should be relieved to see the passage of the “Fiscal Cliff Bill.” While “the bill” addresses a labyrinth of government regulated issues you may be most interested to know specifically the impact on your real estate assets. 

Summary of real estate related provisions in the bill:

Real Estate Tax Extenders

* Mortgage Cancellation Relief is extended for one year to January 1, 2014.

* Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012.

* Leasehold Improvements: 15 year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.

* Energy Efficiency Tax Credit: The 10% tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.

Capital Gains
Capital Gains rate stays at 15% for those at the top rate of $400,000 individual and $450,000 joint return. After that, any gains above those amounts will be taxed at 20%. The $250/$500k exclusion for the sale of a 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 40%, up from 35%. The exemption amounts are indexed for inflation.


I believe these are steps in the right direction for the ongoing recovery of the real estate market. 2012 statistics show an increase in average sale price and units sold. Due to the fact that real estate markets are local, there are differences in how these increases have impacted various metro statistical areas. 
Real estate continues to provide a hedge against inflation, tax shelter, and appreciation over time. In many cases it also produces cash flow.
We still have an active market for REO and foreclosure properties. There are still great opportunities in both the commercial and residential sectors that are difficult to resist for anyone with an itch to delve into investment, purchase their first home or trade up.

I expect 2013 to be another busy year as the real estate recovery stays on track. 

All the best in 2013, from your personal real estate resource,

Nancy Fish