5 Things You Must Know About 2016 Federal Tax Policy on Real Estate

5 Things You Must Know About 2016 Federal Tax Policy on Real Estate

By Emilio DiSpirito Licensed RI Realtor & Real Estate Agent #S35582

The DiSpirito Team - HomeSmart Professionals - 501 Centerville Rd Warwick RI 02886

 Emiliodiv@gmail.com - 401-359-2338

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It's official, Congress has passed and the President has signed well over 2,000 pages of tax code and legislation they feel is needed to run the country through September of 2016. We highlight 5 areas of Federal Tax policy you must know when it comes to real estate. 

1.) Energy Tax Credit for Newly Constructed Homes: Tax credit of $1,000 to $2,000 for "energy-efficient" newly constructed homes has been extended through 2016. Click this list to see other available tax incentives for current home owners. 

*You might want to add this to the list of 7 Ways to Increase Your Homes Value! Energy efficent homes are very desirable for buyers because of cost savings on utilities! 

Contact The DiSpirito Team for a list of prefered contractors and vendors that can make your home "green"! 401-359-2338

2.) Mortgage Debt Forgiveness Act: Attention home sellers who are still underwater!! First off, the good news is that 92% of the countries residential real estate is now carrying equity. This could be yours, click here for an instant home value estimate complete with comps for your property. If it appears you are still underwater consult a local Rhode Island Realtor to give you an accurate price for your home's value "as-is" and ideas on how you may be able to increase your homes value for a break even or profitable sale. 

Home sellers who are still underwater in situations where they can not afford their home may want to look into working with a law firm in Rhode Island like Dellena Law (ask for Melissa and tell them Emilio sent you!) who can consult you on short sales.  The government has passed legislation through September 2016 stating if your bank forgives you money owed, the Federal Government who would ordinarily treat that amount as income will not tax you on the banks loss. In layman terms, your house is worth $200,000, you owe $225,000 or $300,000 and can't afford your monthly payments anymore and can not sell an overpriced home, you can short sell your home!  Basically a short sale works by putting your home on the market at it's current fair market price ($200,000) and selling it around that price. The law firm and Realtor negotaite a deal between buyers and bank where bank may forgive the $25,000 or $75,000 that you owe on that mortgage and the Federal Government will not tax you on that amount all the way through September of 2016!!! That's HUGE!!! It's kind of confusing I know.. My team and I have done a number of short sales and have helped a ton of clients out. Call me if you want more info 401-359-2338.

Check your homes latest market value with a click. Prices are up in RI.. You may break even or turn a small profit! www.TrustTheDove.SmartHomePrice.com

3.) Foreign Investment in Real Property Tax Act (FIRPTA): The FIRPTA bill this year contains 2 provisions worth mentioning. 1.) One provision allows ownership of United States real property interests without being slammed with FIRPTA withholding tax for foreign pension funds. 2.) Overseas investors are now allowed to own a maximum of 10% of a publicly-traded US Real Estate Investment Trust (REIT), this being up from last years 5%. 

What does this mean for the country? Security. That's right, when you have foreign interest investing in our country not only does it allow our economy to grow exponentially and for our commercial real estate to now rebound in hard hit places like Rhode Island, but it also allows job creation in forms of construction, hospitality, services, technology and many other growing industries! 

What does this mean for Rhode Island? Remember those Historic Tax Credits we spoke about a few months back? This could potentially bring millions upon millions of dollars into our economy for overseas investors who want to take further advantage of investments involving savings from this! 

Rhode Island Historic Real Estate Tax Credits - Click Here to Read the In-depth Blog!

4.) Mortgage Insurance Premium Deductible: Many mortgages have "MI" aka mortgage insurance premiums each month. Under this act, home owners are allowed to deduct for an extension of 2015 through 2016. This could equate to thousands of dollars in tax credits along with your mortgage interest deduction tax credits each year for everyday homeowners!! You can scan through housing prices through the MLS in your area if you are interested in buying or upgrading. 

5.) Real Estate Charitable Deduction: Previously expired, this provision in Federal real estate tax code where you get a deduction for contributing real property for conservation is now permanent. Applies to commercial and residential property. 

Two other provisions of interest for commercial real estate would be the Bonus Depreciation and Immediate Expense of Business Equipment and Certain Real Estate. 

Emilio DiSpirito, Host of The Round Table Real Estate Simplified

Tune in every Sunday 10 am streaming on iHeartradio or on air at Newsradio 920!

The Round Table Real Estate Simplified is your place for the timely and balanced truths in the RI and MA real estate markets! 

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