- Current tax rates for all households earning less than $450,000, and $400,000 for individual filers remain in effect
- The tax rate on capital gains also remains the same, at 15 percent, for most households, but for those earning above the $400,000-$450,000 threshold, the rate rises to 20 percent;
- The exclusion from taxes for gains on the sale of a principal residence of up to $500,000 ($250,000 for individuals) remains in effect (subject to limitations);
- Personal exemptions and deductions are phased out for incomes over $250,000 for singles and $300,000 for couples;
- Mortgage cancellation relief for home owners or sellers who have a portion of their mortgage debt forgiven by their lender, typically in a short sale or foreclosure sale for sellers and in a modification for owners is extend through 2013;
- Deductions for mortgage interest, mortgage insurance premiums and state and local property taxes, are extended;
- The alternative minimum tax (AMT) is permanently adjusted for inflation; and
- Estates will be taxed at a top rate of 40 percent (up from 35 percent), with the first $5 million in value exempted for individual estates and $10 million for family estates.
This post is intended as a general understanding of some of the recent changes of the Fiscal Cliff legislation by congress. It’s important to speak to your own attorney and tax professional to address your unique situations. Hopefully this will give you a great starting point in your search to understand this new legislation.
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