How real estate is affected after the fiscal cliff bill

CapitolThe Congress passed legislation to avert the so-called fiscal cliff. Here are provisions of the bill pertaining to real estate.

– Mortgage Forgiveness Debt Relief Act extended to January 1, 2014

In place since 2007, the act provided a tax break for homeowners who struggled through financial hardship such as foreclosure, and were granted mortgage debt forgiveness. The NAR issued numerous calls to action urging its members to ask for the extension of the tax break for another year. Lawmakers heard there appeal.

– Deduction for mortgage insurance premiums for filers making less than $110,000 the deduction is extended through 2013,  retroactive to 2012.

– The 15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013, retroactive to 2012

– The 10% tax credit (up to $500) for owners for energy efficiency improvements to existing homes is extended through 2013, retroactive to 2012.

– “Pease limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be re instituted for high-income filers

“Pease” limitations will only apply to individuals earning over $250,000 and joint filers earning over $300,00. The thresholds are indexed for inflation so will rise over time. Under the formula, filers gradually lose the value of their total itemized deductions up to a total of 20% reduction. First enacted in 1990 the limitations were gradually phased out starting in 2003 and eliminated in 2010. Re institution of these limits has far less impact on the mortgage interest deduction than a hard dollar deduction cap, percentage deduction cap or reduction of the amount of mortgage interest deduction that can be claimed.

The Capital gains rate remains at 15% for individuals earning less than $400,000 per year and couples earning less than $450,000. Any gains above these amounts will be taxed at 20%. The $250,000/$500,000 exclusion for the sale of principle residence remains.

*Source: Florida Realtors®

For more information on buying or selling real estate in Florida, please contact us or call us direct at
305 244-4333 or 305 609-5095.

Leave a Reply