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‘Fiscal Cliff’ Deal Impacts Many Vital R.E. Issues

Sharon Barron, President, and David R. WalkerSouthland Regional Association of Realtors®

After seemingly endless drama, Congress figured out a way to avoid going over the so-called “Fiscal Cliff,” an outcome that should make some property owners particularly grateful, especially anyone involved in the short sale of a home.

As a result of lawmakers do-ing what they're supposed to do, the Mortgage Forgiveness Debt Relief Act has been extended for another year.

That means the measure

will continue to exempt from taxation any mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale, loan modification — including principal reduction — or foreclosure.

With the President’s signature of the compromise legislation, the measure is extended for one year to Jan. 1, 2014.

That’s of particular local impor-tance because more than 30 percent of transactions during November in the

Commercial Day Jan. 23

Traits of a Successful Commercial AgentThe third annual Commercial Day, set for Jan. 23, will focus on the special qualities brokers need to achieve success for their clients. The theme of the popular free event sponsored by First Citizens Bank, is “Traits of a Successful Commercial Agent.” Richard Bozzi, chair of the Commercial and Investment Commit-tee that is organizing the event, urged brokers to register early.

The first two events were sold out with standing room only audiences. Mike Zugsmith, Chairman of NAI Capital and the event’s keynote speaker, will speak on “What makes a winner in today’s market.”

Registration opens at 7:45 a.m. with the program starting at 8:30 am in the auditorium of the Southland Regional

Association of Realtors, located in Van Nuys. Breakfast, sponsored by ACI Capital, and lunch will be served.

The event is free, but attendees must register to guar-antee a seat. Email contact information with an RSVP to [email protected].

Committee members pictured below are, from left to right, Jerry Rosenfeld, Narendra Patel, Howard Fudenberg and Dennis Dishaw.

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Sharon Barron2013 SRAR President

high-income filers.“Pease” limitations only apply to in-

dividuals earning more than $250,000 and joint filers earn-ing above $300,000. The thresh-olds are indexed for inflation, so they will rise over time.

Under the formula, filers gradually lose the value of their total itemized deductions up to a total of a 20 percent reduction.

First enacted in 1990, and named for the Ohio Congressman Don Pease, who came up with the idea, the limitations continued throughout the Clinton years. The limitations were gradually phased out starting in 2003 and were completely eliminated in

San Fernando Valley were either short sales, 19.2 percent, or foreclosures, 11.2 percent.

That pattern recurs throughout much of California, which is why 26,296 California Realtors stressed the importance of the issue in per-sonal messages and phone calls to their members of Congress.

Yet the action taken late Tuesday in Washington, D.C., will have other reper-cussions on housing, including:

• Deduction of mortgage insurance premiums for tax filers making below $110,000 is extended through 2013 and made retroactive to cover 2012.

• Energy Efficiency Tax Credit: the 10 percent tax credit of up to $500 for homeowners for energy efficiency improvements to existing homes is extended through 2013 and made retroactive to cover 2012.

• Return of the “Pease limita-tions” on itemized deductions for high income filers. Under the agreement, so-called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers, but will be reinstituted, for

2010-2012. The reinstitution of these limits has

far less impact on the mortgage interest deduction than a hard-dollar deduc-tion cap, percentage deduction cap, or reduction of the amount of mortgage interest deduction that can be claimed.

• Capital Gains rate stays at 15 percent for those with the top rate of $400,000 individual and $450,000 joint return. After that, any gains above those amounts will be taxed at 20 percent.

• Gain on Sale of Home: The $250,000 individual and $500,000 joint

filer exclusion for sale of a principle residence remains unchanged.

• Estate Tax: The first $5 million dollars in individual estates and $10 million for family estates are now ex-empted from the estate tax. After that the rate will be 40 percent, up from 35 percent. The exemption amounts are indexed for inflation.The Southland Regional Association of Realtors® is one of the largest local trade associations in the nation with more than 9,000 members serving the San Fernando and Santa Clarita valleys.

Nearly 26,300 California Realtors stressed the importance of the

issue in personal messages and calls to members of Congress

Valley home Prices near $400,000Resale prices in the San Fernando Valley have yet to break the $400,000 bench-mark, but it seems certain to happen soon.The median price — the point at which half the homes cost more and half less — was at or above $390,000 six times during 2012, with the November median at $399,000 and June at $399,900.

As the presence of short sales and foreclosures continue to diminish, the median price will show more dramatic increases. It has been trending higher for much of the last two years, yet distressed properties, a severe shortage of inventory, and ongo-ing consumer uncertainty have kept sales and prices in check.

However, multiple offers now are common in almost all price ranges, typically resulting in the final price coming in above the list price. Plus, high-end sales are picking up. All signs suggest that soon enough the median will pass the $400,000 milestone.

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