Fiscal Cliff and Real Estate

Late in the evening of Tuesday, January 1st Congress reached a settlement in the “fiscal cliff” negotiations, and President Obama signed the legislation January 2nd.  As a result, the Mortgage Forgiveness Debt Relief Act was extended another year.  The measure will continue to exempt from taxation mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale, loan modification (including principal reduction), or foreclosure.
The same provision also expired in California, but Senator Ron Calderon (D-Montebello) introduced SB 30, which would waive the potential tax bill for Californians for all of 2013.  C.A.R. already signed on as the bill’s sponsor, and the two hope to fast track the bill through the Legislature.

Also under the fiscal cliff agreement, the so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers.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.  The thresholds have been increased and 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 a 20 percent deduction.  The reinstitution of these limits has far less impact on the mortgage interest deduction (MID) than a hard dollar deduction cap, percentage deduction cap, or reduction of the amount of MID that can be claimed.

Capital gains rates on the sale of principal residences will remain unchanged and continues to exclude the first $250,000 for single taxpayers and $500,000 for married couples.

REALTORS® should encourage their clients to consult with their own tax advisers about their own individual tax situation.

Information provided by Sacramento Association of Realtors.

 

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Homeownership Purchasing Hurdles

Harris Interactive, a market research firm’s bi-annual survey on purchasing a home found the following from a recent online survey: 

Among renters, 59% said they aspired to own a home, but of those, 51% said saving enough for a down payment was their biggest obstacle. 

Those in the 18-34 age group cited the following concerns:   62% saving down payment, 36% qualifying for a mortgage, 34% having poor credit, 31% in ability to pay off existing debt, 29% not having a stable job and 13% declining home values.  

Both the 18-34 and over 55+ age groups expressed preferences that indicate they prefer to live in urban centers:  The younger group preferred short commutes to work and the older group preferred the proximity to restaurants and shops. 

The majority, 70% of respondents said owing a home is part of their American dream.  This attitude toward homeownership rose with age, from 65% of 18-34 year olds to 76% of those 55 +. 

Among current homeowners, 80% said they plan to buy another home in the future and 57% said owning a home is among the best long term investments.

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Homeownership Purchasing Hurdles

We.Are.Homeowners.
Image by MightyBoyBrian via Flickr

Harris Interactive, a market research firm’s bi-annual survey on purchasing a home found the following from a recent online survey

Among renters, 59% said they aspired to own a home, but of those, 51% said saving enough for a down payment was their biggest obstacle. 

Those in the 18-34 age group cited the following concerns:   62% saving down payment, 36% qualifying for a mortgage, 34% having poor credit, 31% in ability to pay off existing debt, 29% not having a stable job and 13% declining home values.  

Both the 18-34 and over 55+ age groups expressed preferences that indicate they prefer to live in urban centers:  The younger group preferred short commutes to work and the older group preferred the proximity to restaurants and shops. 

The majority, 70% of respondents said owing a home is part of their American dream.  This attitude toward homeownership rose with age, from 65% of 18-34 year olds to 76% of those 55 +. 

Among current homeowners, 80% said they plan to buy another home in the future and 57% said owning a home is among the best long term investments.

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Buying vs. Renting

Are you still on the fence trying to decide whether to keep on renting or take the leap into home ownership?   You may never again experience these low home prices combined with the lowest interest rates ever again.     Check out this handy calculator to help you see the advantages of home ownership. (CLICK HERE)  

If you are still unsure, you should contact a REALTOR to discuss the advantages of purchasing a home and find out how much of a loan you can qualify for. 

Don’t be left sitting on the fence saying should’ve…..would’ve…..could’ve  Act now and contact your Real Estate specialist.

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