Great Tuesday, everyone! Hope you all had a great weekend! It’s going to be April in a few days’ time, and that means Tax Day will be coming up soon! Are you ready to file your taxes yet? I stumbled upon an interesting article from NVAR.com that you might find useful if you are a homeowner, buyer, or seller.
TAX INFORMATION FOR HOMEOWNERS, BUYERS & SELLERS
In spite of the extended discussion about modifying the mortgage interest tax deduction and making other changes to the tax code that could impact homeowners, the Congressional resolution of the “fiscal cliff” negotiations left most regulations associated with homeownership in place.
Bertrand says that the tax advantages to homeownership are still in place, since interest paid on a mortgage of up to $1 million and on a home equity loan up to $100,000 can be deducted.
“Single people with an income over $400,000 or a married couple with more than $450,000 in income are being hit with a higher marginal tax rate,” says Bertrand.
Those same high-income earners will also pay a higher capital gains tax of 20 percent rather than the standard 15 percent. While the profit from a home sale of $250,000 for a single taxpayer and $500,000 for a married couple still holds, home sellers who have a capital gain above those amounts will have to pay either 15 or 20 percent on their profit above the exclusion.
Tax deductions, including the mortgage interest deduction, property taxes and charitable donations, are phased out on a sliding scale for single taxpayers earning more than $250,000 and married taxpayers who earn more than $300,000.
More people will feel the expiration of the payroll tax reduction, because this will immediately reduce employee paychecks by 2 percent.
“Probably one of the most important things Congress did was to extend the Mortgage Debt Forgiveness Relief Act for another year through the end of 2013,” says Maureen Berrios, president of Berrios & Associates, Inc. in New York City. “I think it will probably be extended another four years or so, but it will probably gradually be limited and phased out.”
Kahn says that Congress made private mortgage insurance deductible retroactively in 2012 and through 2013, although the deduction phases out for married taxpayers with an income over $110,000.
“Congress also retroactively extended tax deductions up to $500 for energy-efficient improvements on existing homes,” Mortimer says. “The credit applies to purchases made in 2012 and 2013.”
Gift tax rules were also extended, and now allow an individual to give $14,000 tax-free to another person in one year.
“If you have a mom and dad who want to give money to their daughter and her husband for a down payment, they can give up to $56,000 total,” says Mortimer.
Realtors® and their clients should always consult a tax expert who can advise them on their individual circumstances.
Hope you found that article somewhat helpful! Enjoy the rest of the week, everyone!