Short Sales4U
Short Sales 4U is happy to take the “I don’t know” out of one
of the BIGGEST questions for next year… “What is going to happen to homeowner’s
tax benefits that we have now, next year when they expire?”
2013 TAX REPROCUTIONS are
important for all agents to know about.
It’s urgent information NEEDED FOR ALL HOMEOWNERS to
understand nationally.
We don’t need to put the fear of God in people’s minds about
still doing short sales next year. We do
need to educate ourselves and your clients for next years sales.
When push comes to shove, the fiscal Cliff must be met by
relief from the taxpayers of America.
Selling homes and the taxation of them is a major way for
Congress to meet a need that has not been met for quite some time. Recovery needs to happen on both sides of the
board. The taxpayers need relief and so
does the Government.
Many homeowners are trying to close before the end of the
year to take advantage of some major tax relief programs that are set to expire
December 31st 2012 which is important because quite frankly, I don’t believe
they will be there next year.
Real estate brokers who deal in high-end properties have
been reporting an upsurge in listings. Some sellers are desperate to sell their
homes before Jan. 1, 2013, when they could be subject to much higher tax rates
on capital gains.
Are these sellers
right to be worried?
The short answer is "yes," some sellers should be
concerned about higher taxes on capital gains in 2013. If the Bush tax cuts are
allowed to expire at the end of 2012, some taxpayers will see an increase of
8.8 percent on their taxes on long-term capital gains, including gains on home
sales.
Currently, the maximum tax rate on long-term capital gains
is 15 percent. If the Bush tax cuts expire, this will go up to 20 percent on
Jan. 1, 2013.
Also on Jan. 1, the
new Medicare tax enacted as part of Obamacare will take effect. This will
impose a 3.8 percent tax on investment income of individuals earning more than
$200,000 and couples earning more than $250,000. Together, these result in a
23.8 percent tax on long-term individual capital gains -- an increase of 8.8
percentage points compared with the current 15 percent rate.
However, while the 20 percent capital gains rate would apply
to all long-term capital gains, the 3.8 percent Medicare tax will, at most,
apply only to the amount a taxpayer's income exceeds the applicable income
threshold ($200,000 or $250,000).
More
importantly, homeowners will still be eligible for the $250,000/$500,000
exclusion on capital gains from home sales. This means that the 3.8 percent
Medicare tax will affect relatively few homeowners. Nevertheless, it will be a
hit on homeowners who have substantial equity and income.
For example, an individual with a $500,000 in income would
have to pay the 3.8 percent tax on up to $300,000 of his investment income in
2013. If this individual owned a home with $750,000 in equity and qualified for
the $250,000 exclusion, he would be left with $500,000 in investment income,
$300,000 of which would be subject to the 3.8 percent tax -- an additional tax
of $11,400.
If the Bush tax cuts expired, this person would also have to
pay an additional 5 percent in capital gains tax on his home sale profit (20
percent instead of 15 percent), which would result in $25,000 in additional
tax.
Altogether, this person would owe an additional $36,400 in
taxes if he sold his home in 2013 instead of 2012.
Any person with substantial income and equity should perform
this simple calculation to determine how much tax they could have to pay if
they wait until 2013 to sell.
We can help investors still purchase homes and distressed
homeowners still sell their homes. This
tax change will not force our real estate market to cease to recover in this
volatile economy, but it will effect some of our short term investors who were
just trying to jump in and get right out of a good deal.
I can tell that this next year will be exciting and still
very productive for everyone trying to help homeowners and investors alike
understand really what Is happening with the changing real estate market
today.
Its important for every real estate agent working today to
understand not only how to sell your listings, but give sound real estate
advise that can affect your homeowner directly good or bad.
Thank you and I wish you all the best real estate sales you
have had in a long time in 2013!
Your friendly Short Sale expert!! At Short Seles4U- Stacie MacDonald
*some tax
information was use from the Tim Inman website*