If you have plans to buy a Millburn-Short Hills, NJ home in the upcoming year, you may be a bit concerned about the "fiscal cliff" debate that has been going on in Washington D.C. While there is still hope for a compromise between lawmakers, if there is no deal before January 1st, 2013, a ream of automatic tax increases and Federal budget cuts will occur.
These could affect home buyers in Millburn-Short Hills and Summit, NJ in several ways. Most immediately, payroll tax withholding will go up, which will affect wage earners across the board. Next, your income tax filing in 2014, for the tax year 2013, could result in fewer deductions and a potentially higher tax bracket. These changes won't directly prevent you from buying a home, but it could mean changes to your budget.
I'm sharing this infographic from Bankrate.com, which explains the impact of the fiscal cliff to individual taxpayers.
It should also be mentioned that if you sell your Millburn-Short Hills home any changes to capital gains tax rates will not change the allowed exemptions. For example, if you have lived in the home at least 2 out of the past 5 years, the first $250,000 in profit is exempt for single filers. If you are married filling jointly, that exemption becomes $500,000. So far, nothing in the budget debate affects this.
Naturally, all this information could change if a new Federal budget deal is approved in the upcoming weeks. In the meantime, this gives you a basic guideline so you can discuss any concerns you may have with your professional tax preparer.
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