The American Tax Relief Act of 2012 passed on January 2, 2013 brings good news for home owners, sellers, and buyers.
There are three important items in this bill:
1) Preservation of the exclusion from taxes for gains on the sale of a principal residence of up to $500,000 ($250,000 for individuals) for most property owners. CB You sell a home, and the first $500k is free of capital gains taxes. **
2) Extends deductions for mortgage insurance premiums and for state and local property taxes. Note that this is NOT the same as the mortgage interest deduction, which remains in place as before.
3) Continues for one more year the tax relief for homeowners of distressed property (short sales) who have had a portion of their mortgage debt forgiven by their lender. Good news for sellers who would rather C”BBshort sellC”BB their home rather than let it go to foreclosure**
**Disclaimer. These benefits are restricted for those earning above the $400,000-$450,000 threshold. But for the vast majority of home sellers, there is no change.
You can read the blog summary with updates over on the National Association of Realtors website here.
And if you need help falling asleep, here is the full text of the American Tax Relief Act of 2012.