Fiscal Cliff Deal Has Benefits For Struggling Homeowners
The fiscal cliff deal hammered out by national leaders at literally the final hour of 2012 will have a number of benefits for homeowners – who all in all have been handed a raw deal the last few years.
Miami foreclosure lawyers had been watching closely to see what they could expect for the coming months. The truth is, it’s still a mixed bag, but it seems, for a change, there may be more good than bad.
Kenneth R. Harney, executive director of the National Real Estate Development Center, recently penned a comprehensive, point-by-point analysis of how the complex agreement translates for homeowners, buyers and sellers.
For starters, if you are among the millions whose mortgage is backed by Fannie Mae, Freddie Mac, a Rural Housing Loan, an FHA or the VA, the fiscal cliff compromise, titled the American Taxpayer Relief Act, will give you the opportunity to write off any insurance premiums you paid last year, as well as your mortgage interest, so long as your collective household income doesn’t go over $110,000. This deduction had actually expired at the end of 2011, but the bill is going to give you the opportunity to retroactively write-off those things for both 2012 and 2013.
Secondly, if you had some renovations done to your home last year that made it more energy efficient, you could be eligible for a maximum $500 tax deduction. Eligible renovations would be things like insulation or energy-saving doors, windows, roofing material or non-solar water heaters. This measure too had expired in 2011, but thanks to the bill, has been revived.
Thirdly, if you are underwater on your home, there is doubly good news for you with the renewal of the Mortgage Forgiveness Debt Relief Act. This measure provides relief for those who were either planning to work out a short sale or to request a principal loan reduction. It had been scheduled to expire Dec. 31, 2012, but it’s now been extended at least another year. Absent this provision, homeowners who owe more on their home than it’s worth could be held responsible for paying taxes on the difference between what they owe and the amount their home sold for in the short sale – as if that amount were actual money-in-their-pocket income. Same deal for those who requested a principal loan reduction; they would have had to pay taxes on that amount as well.
The expiration of that last measure in particular would have likely devastated cash-strapped homeowners. Many would have most probably had to seek relief in the form of a bankruptcy, as they could have scarcely afforded to pay taxes on tens or even hundreds of thousands of dollars in “income.”
Still, it’s not all good. There will be some increased capital gains taxes for sellers who make more than $250,000 individually or more than $500,000 as a married couple.
In addition to that, the deal will limit deductions you can take for taxpayers who earn more than $250,000 filing single or more than $300,000 filing jointly. It’s a fairly complex formula, but generally, it’s probably going to mean another $1,000 for a couple earning about $400,000 altogether.
So overall, it’s reason for most homeowners to breathe easier – at least until this spring. That’s when a number of other big tax reform measures will be on the table, including several real estate write-offs.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.