As a buyer, you may have asked yourself how will the fiscal cliff effect real estate. That boils down to the most important question, “Is now a good time to buy my retirement home in Sequim, Washington, in light of this fiscal cliff and federal spending that has spiraled out of control, or should I wait for six months or a year?” One drama was resolved with congress kicking the can down the road some more, but much more drama lies ahead on major economic fronts. Charlie Hurt of the Washington Times stated this morning that the “agreement” congress reached last night cut Federal spending by $12 billion while increasing it by $300 billion. Does anyone else feel like we are all actors in a U.S. version of a Greek Tragedy?
How Will the Fiscal Cliff Effect Real Estate
The good news from a homeowner’s perspective is that the exclusion from taxes for gains on the sale of a principal residence of up to $500,000 ($250,000 for individuals) remains intact. Only home sellers whose income is $450,000 or above, and the gain on the sale of their house is above $500,000 would pay taxes on the excess capital gains at the higher rate.
The “American Taxpayer Relief Act of 2012’’ would extend mortgage cancellation relief for home owners or sellers who have a portion of their mortgage debt forgiven by their lender. This would involve a short sale or foreclosure sale for sellers or a modification for owners. Without this extension, the debt forgiven would be taxable, adding additional financial burden to already underwater homeowners. Also extended are deductions for state and local property taxes and mortgage insurance premiums.
How Will the Fiscal Cliff Effect Real Estate – A Macro Perspective
But all this still begs the question, “How will the Fiscal Cliff Effect Real Estate?” From a macro-economic perspective, the fiscal cliff does effect real estate transactions and ownership in the long run, but it is almost impossible to make any reliable predictions about how hundreds of possible outcomes may effect real estate.
How Will the Fiscal Cliff Effect Real Estate – A Micro Perspective
The rational way to evaluate whether to buy your retirement home now or much later is to analyze all this on a micro-economic perspective. In other words, whether your retirement home purchase in Sequim or Port Angeles is a wise investment depends more on your personal transaction details than the political and economic state of the rest of the country. If you know how to search for your home, filter through the list, look at our short list in person and accurately compare location, quality, features, and price, and if you do a masterful job negotiating the price and terms, and you do your due diligence prior to closing, then your purchase will be a good and wise investment, regardless of the national real estate market.
Of course, I highly recommend that you retain a great real estate buyer’s agent who knows the local market and who has the knowledge and experience to help you walk through every step of the process to assure your success. All of my clients who buy their retirement home in Sequim or Port Angeles are very successful, or we do not close their transaction. Period.
This is my perspective on buying your retirement home in light of these crazy economic and political times. When you get ready to buy your dream home, your retirement home in which you may spend the rest of your life, you’re not buying a national real estate market–you’re buying one home in one neighborhood. Now you know how to answer the question, “How will the fiscal cliff effect real estate?”
Last Updated on June 6, 2024 by Chuck Marunde
