Capital Gains Tax
The capital gains tax is set to increase from 15% in 2012 to 20% in 2013. That means if you are one of the lucky ones to own property that has appreciated in value, you may have to pay more tax if you sell it next year. On top of that, you may owe an additional 3.8% Medicare surtax on your investment income if your adjusted gross income meets certain threshold limits. This additional tax will only affect high income earners but the thresholds change depending upon marital status, adjusted gross income and investment income for the year.
If you know someone who has been thinking about selling an investment property, let them know there could be some significant savings for closing the transaction in 2012. For sellers that are not quite ready, there may be a bigger advantage for them to use a tax deferred exchange in 2013 instead of taking a cash payment.
Property Tax Values
If you purchased property in 2012 for a price that was less than twice the assessed value, call your township's assessor before the end of the year. Assessors look at the tax roll of all properties at the end of the year as they adjust values and get ready to send out taxable & assessed value notifications at the beginning of the next year. By talking to the assessor now, while he or she is at the planning stage, he/she may be able to lower the assessed value closer to your purchase price more easily. This can help you save time and energy when the valuations are sent in the mail in February and also save you a trip to the board of review.
If you know anyone who falls into either of these categories, feel free to have them call me to discuss these issues in more detail.
-Dan Stiebel, CCIM