READY FOR THE FALLOUT FROM THE FISCAL CLIFF TAX DEAL?? BILL WALSTON
The Act makes AMT relief permanent by indexing
the exemptions for inflation. With the changes the
act makes, it's pretty much ensured that anyone
making less than six figures will not be affected by
the AMT .
For Real Estate Investors
The Act extended some provisions, through 2013
at least, that affect us as real estate investors.
•
Mortgage cancellation exemption from income
is extended to January 1, 2014.
•
Alternative Minimum Tax
If you make between $250,000 and $450,000 don't
Mortgage insurance premium deduction for
filers below $110,000 is extended.
•
Section 179 expensing is allowed up to
breathe a sigh of relief too soon! You are now in the
$500,000. This amount is reduced dollar for
“sweet spot” for the alternative minimum tax
dollar by the amount of Section 179 property
(AMT). The AMT imposes a 26% or 28% rate on
placed into service during the year exceeding
certain tax preference items. The goal was to
$2,000,000.
prevent very wealthy taxpayers from investing in tax
advantaged investments and avoiding the payment
•
Bonus depreciation is 50% during 2013.
of federal income tax altogether. The problem was
that AMT exemptions were not indexed for inflation
Those are the high points of the American
and had become so low that the AMT would apply
Taxpayer Relief Act of 2012. A major shift in tax
to middle-income taxpayers as well. When the AMT
rates, but no actual tax reform.
was initiated in 1969 it applied to about 155 (yep,
takeaway: essentially no major changes were
that’s 1-5-5) of the richest taxpayers. In 2012 it
made that affect businesses. Owning your own
would have affected about one half of the people
business, like we real estate investors do, is still
making $75,000 to $100,000 and everyone over
the best tax shelter around.
that.
One major