Home ownership and new tax laws
Updated: May 7, 2020
People expect to see new design trends at the beginning of the year; but in 2018 we’re adding new tax laws to our docket. We took a look at the recently-passed tax overhaul (the most significant since Reagan was in office) and focused on how it will impact you, the potential buyer or seller of real estate.
Before we begin, we want to make it clear that we are not tax experts. Please consider this a general guide and consult a professional for tax advice.
How will these changes affect buying or selling real estate?
If you sell your home for a good profit, you can still exclude up to $500,000 (for a couple) from your capital gains calculations.
If you buy a house from this year onward, you may deduct up to $750,000 in mortgage interest. If you are a current homeowner, the original $1,000,000 limit stays in place.
With the exception of military personnel, you may no longer deduct the cost of moving for work.
The new law puts a $10,000 cap on SALT (State and Local Taxes) deductions that you can deduct from your federal tax bill.
If you’re looking to do home renovations, you will no longer be able to deduct the interest from a home equity loan you may take out.
While speculation about the sales market swirls, most agree that the rental market will become more robust as the tax benefits of owning a home have been reduced. What we know here at Liz & Ellie Real Estate is that informed buyers and sellers make the best choices, so if this quick rundown isn’t enough for you, here’s some additional reading:
This CNN article has a simple explanation of the major changes throughout the bill.
Here's the official response to the tax bill by the National Association of REALTORS®
And if you're a purist and want to read the bill itself, which is called the Tax Cuts and Jobs Act, go for it!