DENVER, CO: US Congress with President Pass "Sweeping" Tax Reform Bill.
By now you know, American citizens and companies have a new Tax code to adhere by for 2018 and beyond. Politics aside, the basics for real estate are:
1. Mortgage interest deduction (MID) will be $750,000 instead of $1,000,000
- No MID for second homes
- No MID for home equity loans
2. No change to the residency/amount of capital gains deduction (big sigh of relief here!)
- Still must live in residence 2/5 years to qualify for the deduction
- Deduction still $250,000 filing singly, $500,000 for married persons
3. State and Local Tax deduction capped at $10,000
- Realize that property taxes are part of this deduction cap (it's not just state and local income taxes)
- This is a nightmare for high earners nationally
- This is going to be the one that has the largest affect on home owners in high tax states (CA, NJ, NY specifically)
4. Investors retain all of their deductions, so being a landlord is tax advantaged over being a homeowner.
If you have any questions in how this will effect your real estate such as is this the right time to buy/sell, please feel free to contact the team at MASONmodern.