What the New Tax Law Means for You
February 1, 2018 / / Comments Off on What the New Tax Law Means for You
There’s been a lot of hub-bub in the news about the new tax law. Until now I’ve just glazed over when I heard it talked about because I didn’t understand what it meant for me, my clients, or for our local real estate market. Until now!Â
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Capital Gains
First, the tax law does not make any changes to capital gains. There will continue to be an exclusion for single people up to $250,000 and for married couples up to $500,000 as long as they’ve lived in the home for the last 2 out of 5 years, haven’t used the home for business, and haven’t completed a 1031 exchange.Â
Mortgage Interest
Second, the tax law says the deductibility of mortgage interest is capped at $750,000 (last year it was 1 million). According to the National Association of Realtors, homes with mortgages over $750,000 equates to 3% of the Twin Cities Metro Area.Â
Tax Deductions
Third, the deductibility of income and property taxes are capped at $10,000. In the last 2 years there was 2.5% of the Twin Cities Metro Area that paid over $10,000 in property taxes.Â
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While we may see this change the way luxury homes are purchased, this won’t have much affect on the crazy strong seller’s market we’ve seen for those homes priced under $400,000.
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The 5 most affected areas of the country:
San Jose – Sunnydale – Santa Clara CA Metro Area
San Francisco – Oakland- Hayward CA Metro Area
Santa Cruz- Watsonville CA Metro Area
Santa Maria-Santa Barbara CA Metro Area
Honolulu HI Metro Area
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I’m here to answer any questions you have about the real estate market. Just let me know how we can help!
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Of course any specific questions you have about your particular tax implications are best directed to your tax professional.
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