Thursday, June 27, 2013

Increased Taxes Are Here

In addition to the change in estate and gift tax provisions made as a result of the passing of the American Taxpayer Relief Act of 2012 by Congress as mentioned in this post, the Act also increased taxes on certain income tax provisions, including but not limited to federal income tax rates, capital gains tax rates, and dividend tax rates.

Individuals with taxable income of $400,000.00 per year or $450,000.00 per year for a married couple on a joint tax return will experience higher income taxes in several areas:
  1. The top marginal tax rate on income will increase to 39.6% up from 35%.
  2. The top marginal tax rate on long term capital gains will increase to 20% up from 15%.
  3. The top marginal tax rate on on dividends will increase to 20% up from 15%.
Most people reading this will think after looking at these income levels, that this does not concern them and will never affect them. They think the above applies only to the "1%" and they are just one of the regular folks. However, many people come to find it a surprise that the above tax rules, in fact, does affect them without ever realizing it before when they plan to sell their investment property. This is especially true with real estate being as expensive as it is in New York City.

Wednesday, March 27, 2013

Mortgage Forgiveness Debt Relief Act Extended

The Mortgage Forgiveness Debt Relief Act of 2007 has been extended and will not expire until the end of the year of 2013. As mentioned in the post on Sellers in a Short Sale here, the borrower is subject to income tax if the mortgage lender decides to forgive the borrower or release the borrower from obligations on the balance of the mortgage loan. The Mortgage Forgiveness Debt Relief Act makes an exception to that rule for homeowners who are struggling with their home loans.

Wednesday, January 30, 2013

New Estate and Gift Tax Provisions for 2013

As a result of the American Taxpayer Relief Act of 2012 passed by Congress and signed into law by President Obama on January 2, 2013, the estate tax exemption for the year 2013 remains at $5 million. Adjusted for inflation, the precise amount for the unified lifetime estate and gift tax exemption for the year 2013 is $5.25 million. There are additional changes made to the estate and gift tax laws as a result of the passage of this Act.