As the owner of True Sarasota Real Estate, I know that the passing of the "Fiscal Cliff" has some real estate investors concerned. So, here is a list of the affects that the passing of this bill will have on real estate.


1. Mortgage Debt Forgiveness has been extended. The "Mortgage Forgiveness Debt Relief Act" was put into place in 2007 to help aid financially struggling homeowners by "Forgiving" them of their mortgage debt and will continue to be in place until January 1, 2014.


2. Deduction for mortgage insurance premiums is extended. If you make below $110,000 annually the deduction for mortgage insurance premiums extends through 2013 and was also made to cover 2012.


3. Leasehold Improvements extended. 15 year straight-line cost recovery for leasehold improvements to commercial properties extends through 2013 and was also made to cover 2012.


4. Energy Efficient Improvements. The 10% tax credit, up to $500, that will be granted to homeowners who have made their existing home more energy efficient has been extended through 2013 and was also made to cover 2012.



5. "Pease Limitations". The Pease limitations (limitations on itemized deductions) will apply only to individuals who make $250,000 and joint filers making $300,000 annually. Remember, these numbers will adjust for inflation.

 

6. Capital Gains Rate. The Capital Gains rate will stay at 15% for those earning less than $400,000 annually as individuals or $450,000 jointly. Anything above this will raise to 20%, excluding the $250,000/$500,000 for the sale of principle residence.


7. Estate Tax Exemptions. The first $5 million in individual estates or $10 million for families are exempted from this tax, but after that the tax rate will be 40%. Keep in mind, again, that these numbers adjust for inflation.