Most Hilton Head buyers base their purchasing decision more on emotion than logic.  As we drive around the Island, Hilton Head buyers rarely ask how much mortgage interest they get on this one or that one.  While the mortgage interest deduction is important, its not the main reason to own a great property on Hilton Head.  There are other reasons and with over 10,000 baby boomers turning 65 everyday we do expect to get calls even if the Bush Era Tax does expires.  Hopefully it does not.

Number Crunching the benefits

We asked a local CPA to give us an example of the amount of savings the mortgage deduction provides.  Here is his example, but keep in mind there are many variables including income, mortgage amount, and tax bracket.  If a taxpayer buys a really cool property on Hilton Head, files jointly and has taxable income of $250,000, the taxpayer would be in the marginal tax bracket of 33% and would have a Federal tax of $59,955.  If they have an interest only mortgage of $500,000 and a 5% interest only rate, they would be paying $25,000 interest per year which would provide a tax savings of approximately $8,800.  The cap on the mortgage interest deduction is for loans up to $1 million dollars.   There are talks about cutting it in half ($500,000) or even setting it at the conforming loan limit in a given area($417,000).  Based on cutting it in half our buyer example above would still get his deduction.

Living the Benefits of a Hilton Head Property

Some things however will never change.  The natural beauty of Hilton Head never changes in this constantly changing world.  The beaches, the communities, the shopping, the dining, the waterways and the attitude on Hilton Head Island seem to be a constant we all crave in this changing world.  As a Hilton Head Resident, I get to walk my talk and live this lifestyele everyday.  We invite you to come see the features, advantages and benefits of living on this wonderful Island with us.

What about the Medicare Tax and Hilton Head

Medicare Tax or “Obama care”  will not affect income that is currently tax-exempt, including most capital gains due to the sale of a principal residence which is exempt due to the $250,000 or $500,000 gain exclusion rules.   The tax increase could affect a small percentage of second homes that are not subject to the gains exclusion or sales that involve a significant capital gain. However, the number of transactions impacted by the new tax would be further limited because taxpayers with less than $250,000 in income are not subject to the tax.

Full Speed Ahead for Hilton Head Real Estate

While these type of issues often create some fence sitting, the real benefits in buying is the spanish moss,  the moonbeams, great properties, decreasing inventories, attractive interest rates and natural beauty of Hilton Head. As we look back we will most likely see that there are no cliffs in the Low-Country.  In fact, the Hilton Head Real Estate Market should continue to improve into 2013 as we put this behind us.