Did you know that the current tax cuts are set to expire at the end of this year? What does that mean? Well, taxes are going up as of January 1, 2013 because the current tax cuts are set to expire. Ordinary income tax rates and capital gains rates are going up. The good news is that you can plan ahead.
For those who are considering whether or not to sell their home this year or next year, this impending increase in the capital gains rate could be of interest to you because the current federal capital gains rate on real estate is only 15% (which is expected to increase to 20% or more in 2013).
Sellers on the Westside and in beach communities throughout LA county are becoming aware of this tax increase and planning ahead. They understand that the market has shifted to become a Sellers' market and that a number of buyers lost in the bidding wars over the summer. So what does that mean? It means that Sellers still have a substantial amount of negotiating power during the third and fourth quarters of 2012. It is also good news for buyers because it means that there will be homes on the market during the Autumn and Winter months.
If this is the first time you're hearing about this tax increase, do not fret. The immediate impact will be on individual homeowners who will earn more than $250K in capital gains or married couple homeowners who earn more than $500K in capital gains from their sale. (Sidebar: This tax increase more often than not will affect those who are retiring and downsizing and/or those who are great real estate investors.) If you fall into this category of sellers, do not fret because there is still time to plan ahead. (www.marcel.kwrealty.com)
For more info about these tax increases, check out this article:
http://www.inman.com/news/2012/08/8/high-end-homeowners-rushing-beat-2013-tax-increase
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