As we all are listening to reports about the bill on the “fiscal cliff” compromise, like many pieces of legislation you never really know what’s in it.
In this case, for us in the REALTOR® family and our clients, there is some good news. Several of the provisions contained in the American Taxpayer Relief Act of 2012 have been on the radar of the National Association of REALTORS® (NAR) and one in particular has been the subject of laser focus. I am referring to the Mortgage Forgiveness Debt Relief Act.
This law, which was the subject of a recent NAR Call to Action, was extended through Jan. 1, 2014. According to NAR, “The amount extends up to $2 million of debt forgiven on the homeowner’s principal residence. For homeowner’s to qualify, their debt must have been used to “buy, build, or substantially improve” their principal residence and be secured by that residence.”
The continuation of this tax relief is particularly important in light of the fact that while things are improving in the marketplace, we still are not out of the woods.
This benefit is very important to underwater clients who are either attempting a short sale, deed in lieu and those who are trying to obtain principal reductions on their mortgages. Here in our state the Illinois Housing Development Authority (IHDA) is on the front line of this and agree that this extension was a key component to the bill.
“The exemption on debt forgiveness is a great victory for Illinois’ distressed homeowners,” said Mary R. Kenney, executive director of the Illinois Housing Development Authority. “The extension of this exclusion will provide additional help to Illinois homeowners seeking relief in the form of loan modifications through various state and federal programs.”
The other provisions include, capital gains, estate tax, energy efficient tax credits, mortgage insurance premium deductions, and of particular interest to our commercial and investment brokers, leasehold improvements. There are income provisions on some of these issues, details that can be found by clicking here.
As far as the Illinois Congressional delegation, all voted yes except for Reps. Randy Hultgren (R-Winfield), Peter Roskam (R-Wheaton), Joe Walsh (R-McHenry), and Bobby Schilling (R-Rock Island). Sen. Mark Kirk (R-Illinois) did not vote and will be returning to the Senate in the next several days.
This legislation however, is not the end to tax and overall fiscal reform. Discussions on spending and taxation will continue to be a highlight of the new Congress.