Since Manhattan is an expensive place to live, (lets face the facts), we real estate professionals get very queasy when speaking of the "Fiscal Cliff", "American Taxpayer Relief Act", increase of the Social Security Payroll Tax by 2%, and other wonderful provisions, many of which we may have yet to learn of...
Speaking of said provisions, The American Taxpayer Relief Act imposed a 39.6% rate on taxable income above the following thresholds; (Data from Duane Morris on Mondaq.com)
- Married taxpayers filing jointly and surviving spouses with taxable incomes up to $450,000
- Taxpayers filing single with taxable incomes up to $400,000
- Taxpayers filing as heads of households with taxable incomes up to $425,000
This act also extended the 15% rate on dividends and long term capital gains under the above threshold levels, and imposed a 20% rate on long term capital gains and qualified dividends to the extent their income is higher than the above thresholds.
There is now a permanent top estate tax rate of 40% and estate tax exclusion of $5mm for estates of decedents dying after December 31, 2012.
Those of us who work (in dwindling numbers), are now paying an extra 2% payroll tax which is said to affect 114 million taxpayers !
There is so much more to read in provisions, so I ask that you please read the fascinating story above on the link...
So, enough is enough here folks ! Many fear with the increasing burden of new taxes and few spending cuts we will continue to drive workforces overseas, which also means investors in real estate may leave, and individual home buyers will go too !
Have we become so liberal that we are now too fiscally liberal and haphazard in the running of our government ?
We need the wealthy individuals and corporations in this country to expand our infrastructure and commerce. My take is people with big money to invest may just go elsewhere - using France as an example...
What about first time and regular homebuyers? Will they be able to get their financing ? or will they have front and back end ratios that prove to be so out of whack that their dream apartment in Murray Hill must be passed over? (from excessive borrowing and lower disposable incomes).
We really do not know of the true impacts yet, but I am sure they will be negative for our real estate market here in Manhattan, at least until people get used to the idea that they will continue to pay more money to live in our wonderful America.
The fiscal cliff will be back to haunt us time and time again until we get a handle on this crazy bunch of people we elected, from our senators, congress and our own president. It has nothing to do with party affiliation - they are all guilty of sitting on their butts while we suffer at their hands !!
My advice - Contact your nearest accountant so you know how to make the laws and tax provisions work for YOU !
Reader comments are always welcome - send me your comments and/or suggestions to Italkgothamre@yahoo.com. Thank you for reading ! Bob Skinner