For homeowners who are in the highest income brackets, there are some negatives with marginal tax rates and capital gains. If you earn $400,000 or more as a single filer or $450,000 as a joint filer, your new marginal federal tax rate is 39.6 %. You also get hit with a 20 % rate on long-term capital gains, such as those from investment real estate and home sales that rack up gains beyond the $250,000/$500,000 thresholds.
Also, the new “Obamacare” 3.8 % surcharge on certain investment income, which went into effect January 1, could raise effective rates on capital gains for upper bracket households to 23.8 %. As a result, some investors in rental property and commercial real estate may begin looking again to Section 1031 tax-deferred exchanges to hang onto their profits. For taxpayers in the 33 %, 28 % and lower marginal tax brackets, capital gains will continue to be taxed at 15 %.
In an in-depth year-end profile, Forbes describes Louisiana and specifically New Orleans as “America’s New Frontier for Business Opportunity.” The article concludes by asserting that “Now, with several industries flourishing simultaneously, financial incentives, workforce training programs, and an influx of both new and established businesses, Louisiana has been able to not only overcome a natural disaster, oil spill, and national economic recession, but has become one of the most competitive and prosperous states for business.”
REAL ESTATE TAX EXTENDERS:
• Mortgage Cancellation Relief is extended for one year to January 1, 2014.
• Deduction for Mortgage Insurance Premiums for filers making below $110,000 is
extended through 2013 and made retroactive to cover 2012.
• Leasehold Improvements: 15 year straight-line cost recovery for qualified leasehold
improvements on commercial properties is extended through 2013 and made retroactive to
• Energy Efficiency Tax Credit: The 10% tax credit (up to $500) for homeowners for energy
improvements to existing homes is extended through 2013 and made retroactive to cover