The last few months of 2012 were all abuzz about the looming so-called “fiscal cliff” and whether or not the country would topple over the figurative landmark. This week, the cliff-hanging came to an end when Congress, the House of Representatives, and the President were all able to come to an agreement on how to remedy this situation.
Compromises were made on both sides of the aisle, but without getting too political, let’s just say that, according to our friends at Inman News, the housing market is definitely going to benefit from these motions in four ways as outline below.
1. Mortgage Forgiveness Debt Relief will Continue through 2013. Short sales are a way for distressed homeowners to get out of a mortgage that is “underwater”. If the country plummeted over the fiscal cliff, we’d revert back to the way it was in 2007, when mortgage principal deductions or cancellations would become taxable “income” for these homeowners, encouraging them to take the financial fall in the form of foreclosure or bankruptcy. Now, we’ve got at least another year to benefit from short sales without penalizing taxation.
2. Mortgage Insurance Premium Deductions. This not only helps people who will pursue home loans in 2013, but also those who borrowed in 2012. As Inman puts it, “Qualified borrowers who pay private mortgage insurance premiums or guarantee fees on conventional, low down payment home loans, FHA, VA and Rural Housing mortgages will be able to write off those premiums along with their mortgage interest on federal tax returns.”
3. Tax Credits for Homeowners Who Go Green. If you make an upgrade to your home between $200 and $500 in order to make it more energy efficient, you’ll get rewarded via a tax break. Like the previous motion, it is also retroactive to include purchases made in 2012.
4. Tax Credits for Builders Who Go Green. Likewise, builders and contractors can get a $2,000 tax credit on new homes constructed in 2012 and 2013 that meet certain federal guidelines. The environment, evidently, also gets a piece of the fiscal cliff bill pie.
Just like there are two sides to every story, there are also a few downsides to the bill’s terms. But the negatives pale in comparison to the positives. Tell us your thoughts by commenting below. For more information on how the new fiscal cliff bill affects you and your clients, check out the article originally posted by Inman News.