While the latest tax laws, effective Jan 1, 2018, will not affect your 2017 filing, it’s important to prepare now to avoid surprises in 2019.
Here are a few important real estate-related results of the new tax bill to keep in mind:
- Mortgage interest deductions are now limited to a combined $750,000 of debt for both primary residences and second homes for any loans taken out after Dec. 14, 2017. Current homeowners with loans made before that date, however, are grandfathered into the previous deduction, which allowed a combined debt limit up to $1 million.
- State and local tax deductions are now capped at a combined $10,000 – this includes state and local property, income and sales taxes. This will largely affect taxpayers in higher-tax states.
- Capital gains tax exclusions remain the same when you sell your house. Married couples filing jointly can still exclude up to $500,000 when selling their primary home, as long as they’ve lived there two of the past five years.
- Investment properties were largely unaffected by the new tax bill. As such, you will continue to enjoy the same financial benefits for any investment property you currently own or those you may buy in the future.
While the inventory shortage will likely continue through 2018, this is a great time to invest in real estate. Homes are appreciating, interest rates on mortgage loans are still around historical lows and there are tax advantages for property and business owners.
*The information contained in this post is not intended to be and does not constitute financial or investment advice.