My boss thinks we'll go off the fiscal cliff and recommended that I not close on a house prior to Dec. 31 because of it. I have no idea how much a difference this would make to me. I guess the idea is taxes will go up, stock values will go down and I'll be poor. I'm already poor!
Does anyone here have some useful insight into this conundrum?
If we go off the cliff, you are looking at your income tax rate going back to what it was in the 90s. And the SS tax holiday will go away and thats another 2 percent.
Most people don't pay much taxes at all anyways. So unless you making like way over 100k I wouldn't worry.
Yeah, I don't think he has any conception about how most real middle-class people live. But it bummed me out to hear him say that.
So many people are very misinformed and panic about this (like your boss). OMG fiscal cliff! End of the world!
Even if we "fall off" this cliff, it's not exactly the end of the world for most people or anyone really. From what I've read, taxes would go up $2000 - $3000 per year per family on average, so $165 - $250 per month. While it would suck, it's certainly not the end fo the world. People would adjust.
I personally think they will figure something out and taxes will not go up, at least not on us "poor" people who make under $250k per year. I just don't see them letting it happen.
article on CNN today about the effect of the fiscal cliff on homeowners--honestly cannot tell if this should affect my plans or not.
My boss has been telling me the same thing...gloom, doom, and despair is what we're headed for and I should continue to rent. I'm not paying any attention to her. Our house payment is less than what we pay in rent and the house we are purchasing is in a desirable area where homes stay on the market for 30 days or less.
Couple things from that article
1st. Possible recession. Taxes increase and spending decreases it could mean jobs.
2nd. Capital Gains. Right now they are set to 15 percent but would go to 20 percent. This means if you sell your home and you earned over 500k in profit, anything you earned over 500k would be taxed at 20 percent. But not a whole lot of people clear that kind of profit. We are talking homes selling in the millions.
3rd. Interest Cap. There are talks of capping what you can write off in interest. So lets say they cap it at 25k, if you pay more than 25k in interest for your mortgage loan you will only be able to write off 25k and the rest you would be taxed on. So if you have an 800k mortgage you are not going to be able to write off all the interest.
Good info on the capital gains and intereset cap.
I didn't know that is how the capital gains worked, I thought it was 15% or 20% across the board, didn't know there were brackets. So $500k is the cutoff or are you using that just for example purposed.
Its 500k cut off.
So if you sold that 2 million dollar home you bought for a million a few years back, you gonna pay taxes on 500k of it. tough problem to have