Impact of Fiscal Cliff Agreement on Homeowners?

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housing and fiscal cliff

There was so much fear mongering going on about “The Fiscal Cliff” it was starting to feel like being tied to a chair and being forced to watch The Shower Scene from Psycho. The stock market rallied up in response to it just being OVER WITH! But should we just be happy that it’s over with? Did the final agreement impact homeowners?

Doug Tingvall of RE-LAW sent me a quick synopsis of how the deal impacts homeowners “for now”. I asked him to post it publicly as I think it might be of interest to homeowners and homebuyers. I don’t see much in there that is alarming or even much of a change, but maybe I’m missing something. Read Doug Tingvall’s full synopsis HERE

While Doug’s Article does not seem to have a place to ask questions or post a comment, if you have questions you can post them here and I will see if Doug has some time to answer them for you.

The summary is worth a quick read and many thanks to Doug Tingvall for sending it over to us.

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7 thoughts on “Impact of Fiscal Cliff Agreement on Homeowners?”

  1. No, Ardell, you’re not missing anything. The “fiscal cliff” deal is more notable for what it didn’t do than what it did. For example, without the deal, homeowners would have to pay income tax on the mortgage debt forgiven by the lender in a short sale or foreclosure, which would have been devasting for underwater homeowners.

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  2. Thanks Doug! Sorry for the “ad” at the bottom of the post. We’re still tinkering with the new format.

    I very much appreciate your concise synopsis of what DID happen vs all the stories about what didn’t. It makes for a much better understanding, and I may have to turn The Cliff House in the photo back up on its foundation as a result.

    Homeowners NOT going over the cliff. YAY! 🙂

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  3. Ardell, see my recent post for a whole lot more information on what I think was the most important issue addressed by the recent law avoiding the “cliff”: the ability of a homeowner to avoid income tax liability for forgiven debt secured by a principal residence. Note that Doug’s comment above — that absent this provision a homeowner would face income tax liability following a non-judicial foreclosure — is open to some debate.

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    • Hi Josh,

      The Cliff House, which is its official name, is one of several houses by that name. This is one in Quebec. It does not in person look like the house is falling off the cliff, of course. I just tilted the photo and added a bit of “slide” to it. 🙂

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  5. In addition to the extension of the mortgage forgiveness act, they also extended deductions for mortgage interest, mortgage insurance premiums and state and local property taxes. The exclusion from capital gains with the cap at $500,000 ($250,000 for individuals) remains in effect (subject to limitations). These deductions are relied upon by millions of home owners and have a significant impact on the amount of taxes that are paid annually.

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