Hello Kathleen, Shoshana, Cat, Melissa, Colin, Lisa & Mike - We hope you are enjoying our newsletter and find value in the information. Please remember we are always here to help with any of your real estate needs!
Email not displaying correctly?
View it in your browser .
Kathleen, Shoshana, Cat, Melissa, Colin, Lisa & Mike      The Goneau Group
Kathleen, Shoshana, Cat, Melissa, Colin, & Lisa
Real Estate Consultants
Keller Williams Realty
(508) 251-2558
1084 Main Street Bolton, MA 01740
Friend Me on Facebook
Follow Me on Twitter
Connect with me on LinkedIn
Our Website Home Search Featured Listings Check Out Our Instagram Contact Me
Share Save

How the New Tax Law Affects Housing


The housing industry, homeowners and renters are trying to figure out how the Tax Cuts and Jobs Act will affect homeownership. Here are some of the most confusing issues.

Mortgage interest deduction

For many homeowners, the mortgage interest deduction was their biggest tax break. Unfortunately for them, the new tax law lowers the cap on this deduction.

In the past, the cap was $1 million in mortgage debt, and another $100,000 in home equity debt. Now, homeowners can deduct interest on a mortgage up to only $750,000. The home equity loan interest deduction still exists, but only in limited circumstances. However, the $1 million amount has been grandfathered in for those who bought homes until Dec. 15, 2017.

The median price of a U.S. home is a little more than $200,000, so lowering the cap won't affect most homeowners. But under the old tax law, 44 percent of U.S. homes are worth enough to make it sensible for a homeowner to take advantage of the mortgage interest rate deduction, said Zillow; under the new law, that proportion drops to 14.4 percent.

How this affects housing: Predictions say the new law will hurt people living in high-priced homes. Not only might their tax burdens be higher, but people thinking about buying those homes will have less incentive to pony up for a more expensive home. Everyone is in a wait-and-see mode — to see how the new rules affect the desirability of homes and whether the law will change home prices.

In a related issue that has real estate agents worried, the new law raises the standard deduction substantially, meaning many who itemized will no longer have a reason to — and a range of deductions becomes meaningless to them. These people no longer have a tax-related reason to buy a home.

State and local tax deductions

Under the old tax code, homeowners were generally allowed to deduct all property taxes paid to state and local governments, if they didn't pay an alternative minimum tax.

No more.

The new tax bill limits the deduction for all SALT, which include state and local income and sales taxes, to $10,000 for married couples and singles. If you live in a high-tax state like New York, New Jersey or California, that deduction reduction is going to hurt.

How this affects housing: If you itemize deductions on your annual federal tax form, homeownership looks less attractive and becomes more expensive if you can't deduct all SALT, especially if you own an expensive home. Renting may start looking better and better.

Bottom line

It all comes down to why people buy homes. Because homeownership is part of the American dream? A rite of passage into adulthood? A way to live in more bedrooms and a better school district? Or a generous tax deduction?

Buy or selling a home is an emotional, as well as financial, decision. And the feeling that homeownership isn't the tax break it once was could lead to fewer sales and lower prices on some levels, and less inventory and higher prices on others.

Not sure how the new tax law affects the price of a home you own or someday hope to buy? Give us a call, and we'll help you figure out how the Tax Cuts and Jobs Act affects which housing option is right for you.





Share Save

Your Comments

Saved Articles
Comments and Feedback
Refer A Friend
Your Privacy
The information provided in this email newsletter is for general guidance only, and does not constitute the provision of legal advice, tax and accounting advice, real estate investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional real estate, tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Home value estimate calculators provided herein are general estimations based on publicly available data and should not be used as a substitute for a professional appraisal. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
Powered by
Copyright © HomeActions, LLC All rights reserved.

This email was sent to: kgoneau@kw.com

Mailing address: 1084 Main Street, Bolton, MA 01740