So after weeks of talks and with an entire nation on the edge of their seats, as well as the edge of economic collapse, the political parties managed to find a middle ground and sign a bill which extends current tax relief on selling a home using short sales!
If the government figured it all out, then what is the meaning of my title? Well, the truth is, we actually did not avoid the fiscal cliff, we actually went over. It's just that the bills passed will take effect before any real negative downturn can kick in economically speaking. Why is the cliff avoided for now? Simply because we did not get any genuinely solid tax reform going forward into the future, these are only temporary fixes, due to be reviewed again this time next year.
With one in every four homeowners currently owing more than their home is worth, we are happy to see that we will have at least one more year to sell these homes and help people to move on with their lives while avoiding a big tax bill on the cash they scrape back from the deal.
So while we should all be happy that the problem has been fixed, for now, keep an eye on what happens with these issues over the next 12 months as we may well see a similar situation arise next holiday season.
