As signs that the recession was finally ending began emerging from rising stock markets, increases in retail sales and employers once again hiring, the real estate industry jumped for joy when this economic upgrade stimulated buyers into purchasing thousands of luxury homes in November and December of 2012. This spending spree was also stoked by the fact that home sellers knew that a five percent hike in the capital gains tax was going to take effect beginning January 1, 2013, as one aspect of the budget deal designed to eliminate the “fiscal cliff” issue.
Rising from 15 to 20 percent, the capital gains tax affected single people earning more than $200,000 and couples earning at least $250,000 annually. Homeowners in these tax brackets also wanted to sell their homes before the nearly four percent Medicare surtax on investment income was expected to affect high-wage earners due to implementation of the Affordable Care Act.
For example, if a homeowner made one million dollars on the sale of his or her residence in 2012 and not 2013, this would mean paying almost $90,000 less in taxes on that sale. Due to this hefty savings in taxes, the National Association of Realtors is reporting that many upper income homeowners are putting their homes up for sale in order to make a profit and avoid paying higher taxes when new tax rules and regulations take effect later this year.
Home to some of the most expensive real estate in the U.S., Manhattan experienced a 45 percent jump in sales of homes valued at $10 million or more during the latter part of 2012. Sales agent Meredyth Smith, who works for Sotheby’s says that the looming fiscal cliff spurred many of her clients to quickly close deals before the first of the year.
Buyers have taken advantage of the rush for sellers to make deals on their homes before this new tax hike. However, this buying and selling binge has created a drastic decrease in number of luxury homes available for purchase. Although most real estate agents see this as a temporary condition, they encourage luxury homeowners who are interested in selling their homes to benefit from this type of economic climate and place their home on the market with a professional real estate agency.
With low mortgage rates, a ratio of five active buyers for every one home and a host of foreign buyers eager to invest in American luxury homes, homeowners entertaining the possibility of making a considerable profit on a $200,000+ home in New Jersey should contact Orly Chen as soon as possible to begin the process of advertising and selling your home.