The National Association of REALTORS® has done a good job reporting the effect on the housing industry of the American Taxpayer Relief Act passed by Congress this week. Beyond the change in personal income tax rates that have filled virtually all news accounts, the Act also
- extends mortgage cancellation relief that has made short sale a strong alternative to foreclosure,
- extends the treatment of capital gains on the sale of a principal residence, and
- extends the capital gains tax rate of 15% for taxpayers below the $400,000-$450,000 threshold.
Those are high points for homeowners and real estate investors, but there is much more:
From my perspective, a key issue is that the Act leaves many of these important provisions unsettled beyond 2013. Everybody seems to have sighed in relief that this was passed, but the same debate must begin again as soon as the new Congress is sworn in this month. As Yogi Berra said, “It ain’t over ….”