Provide sellers and buyers with the service and Committee they deserve to purchase there next home. - I just wanted to post some information that you will find useful in todays economy To help 1st time home buyers with the process to Buy ther
By Robert Freedman, Senior Editor, REALTOR® Magazine
The law enacted by President Obama last week to extend the tax cuts of President George W. Bush includes a number of provisions of importance to real estate, but it also leaves out at least one provision NAR opposes. In short, it’s largely a continuation of the status quo for the near future. The one potential drawback is in its cost.
Since it’s not paid for with any program cuts, it stands to put upward pressure on interest rates in the future and could lead to more pressure on lawmakers to find ways to cut the federal deficit, which in turn could make tempting targets out of the mortgage interest deduction and other programs through which the federal government has historically shown its support of home ownership.
On the plus side, the law leaves out a proposal that’s been talked about for close to two years now, and that’s to tax as ordinary income rather than as capital gains the carried interest of general partners in investment partnerships. That proposal, which is targeted at hedge fund managers, would hurt real estate investment partnerships disproportionately, because the vast majority of investment partnerships are for real estate, and NAR has opposed it. So, that issue is neutralized for now.
In general, the law keeps in place existing tax brackets (which go from 10 percent on the low side to 35 percent on the high side) and the existing capital gains rate, which will remain at 15 percent. Depreciation recapture tax rates remain at 25 percent. No new limitations are created for Section 1031 like-kind exchanges. And the existing 15-year cost recovery period for leasehold improvements is retained. Same with existing bonus depreciation treatment: assets with a cost recovery period of 20 years or less are eligible for 100 percent depreciation in the year the assets are placed in service. This rule applies to all assets placed in service on or after Sept. 8, 2010, and before January 1, 2012. Eligible assets placed in service during 2010 will qualify for a 50 percent bonus depreciation allowance.
You can get more details on these provisions in an initial analysis by NAR Government Affairs on REALTOR.org.
Other provisions of note: