A 5% increase in the tax on capital gains, currently at 15%, is being touted as the driving force behind a luxury home sales spike in late 2012.  The increase is part of the newly passed Fiscal Cliff Budget Deal. Also noted as a driving force behind the spike was the upcoming 3.8% Medicare surtax on investment income which was part of the Affordable Care Act also slated to go into effect this year.  This surtax would affect high-income earners (singles with income of $200,000 or more and couples making more than $250,000) upon the sale of their properties once it takes effect.

The rush to sell in 2012 versus 2013 for high earners is expected to save an estimated $88,000 less per $1 million profit on their homes. In fact, the sales of homes valued at $1 million or more jumped 51% in November 2012 versus a year ago per the National Association of Realtors.

It was evident to many brokers in upstate areas such as Manhattan, that sellers were extremely motivated to close before the end of the year.  In some cases, they even offered incentives to buyers to guarantee the close in time to save.

The high end market sales are not expected to change signficantly moving forward, however.  Historically low interest rates, foreign investor interest, along with increased domestic buyer interest as the market continues to recover, should maintain the market in 2013 per industry experts.

See the full article from CNN Money Here