We had a lot of news coverage in the weeks leading up to the New Year about the fiscal cliff and other tough financial issues that will need to be addressed in the coming months. Congress was able to draft last minute legislation to avoid the fiscal cliff, but what does that mean for homeowners here in Elmhurst?

Shortly after the bill’s passage, the National Association of Realtors released a brief on the issue detailing some of the ways homeowners and real estate investors may be affected. At a fundamental level, the Mortgage Interest Deduction remains, and the Mortgage Cancellation Relief will be extended for one more year until January 1, 2014. The Deduction for Mortgage Insurance Premiums for filers making less than $110,000 will be extended through 2013, and is also made retroactive to cover 2012.

The 10% Energy Efficiency Tax Credit (up to $500) for homeowners for improvements made to increase the energy efficiency of existing homes is extended through the remainder of 2013 and is also made retroactive to cover 2012, too. The exclusion from the sale of a principle residence, $250,000 for singles and $500,000 for couples, remains in place.

Of interest to commercial real estate investors, the 15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012. The capital gains rate remains at 15% for those at the top rate of $400,000 individual and $450,000 joint, and for those above that level, the rate rises to 20%. However, the $250K/$500K exclusion for a principle residence still applies.

The estate tax was also addressed in the bill. The first $5 million dollars in individual estates and $10 million for family estates are now exempt from the estate tax. Above that level, the rate will be 40%, which is a 5% increase. The Pease limitations on itemized deductions for high-income filers are eliminated for 99% of American taxpayers, but remain in place for individuals earning more than $250,000 and couples earning more than $300,000. For more specific information on this or any of the decisions affecting real estate, you can read the full NAR brief here.

Here at The Gracik Makinney Group, we’re dedicated to helping you understand the entire process of buying, selling, and investing in real estate, and helping you make the best decision for your individual needs. As part of our own plans for the New Year, the Gracik Makinney Real Estate Group is pleased to announce our new affiliation with Coldwell Banker. Contact us today at our new address - 190 N. York Road in Elmhurst, or at (630) 567-5902.