Looking ahead, all those rushed deals could mean a slight slump in high-end sales early in 2013, said Sotheby’s CEO Philip White. Not only will buyers be in shorter supply but the inventory of luxury homes has dropped precipitously. But White thinks the drop-off will be short-lived. Historically low interest rates should continue making the long-term cost of buying these homes attractive to buyers. In addition, foreign buyers continue to invest in U.S. properties and many domestic buyers are starting to come off the sidelines now that home prices are starting to recover.
NEW YORK – Sales of luxury homes spiked in the final months of 2012 as high-end homeowners rushed to take advantage of lower tax rates before January 1.
Many sellers wanted to cash in on their homes before a widely expected capital gains hike — to 20% from 15% — that was part of the fiscal cliff budget deal. High-income earners (singles with income of $200,000 or more and couples making more than $250,000) also wanted to close sales ahead of a 3.8% Medicare surtax on investment income that was already slated to go into effect this year as part of the Affordable Care Act. All told, a high-earner would pay $88,000 less in taxes if they made a $1 million profit on their home in 2012 rather than in 2013.
By Les Christie, Jan. 8, 2013 CNN