The new tax law passed and signed into law at the end of 2017 is one of the most significant overhauls to the tax code since the 1980s. As a homeowner it is important to be aware of how these changes affect the real estate market – in particular your personal residence or investment property. Here’s a look at how the new tax reform impacts current and prospective homeowners:
Mortgage Interest Deduction
The limit on deductible mortgage debt is $750000 for new loans taken out after December 14 2017 – down from the previous $1 million. While this does not affect current homeowners it will impact buyers purchasing homes in the future – specifically those purchasing high-end luxury homes.
State and Local Tax Deductions
The cap on state and local deductions for income and property tax is now $10000 for single and married filings. Previously this deduction had no cap.
Capital Gains
The new bill retains the current capital gains law of $250000 single and $500000 married. The only aspect that has changed is how long you must reside in the residence to qualify – instead of two out of the past five years it is now five of the past eight years.
Standard Deduction
The standard deduction – the amount you can subtract from your income before calculating taxes if you are not itemizing your return – has increased to $12000 single and $24000 married. As this deduction has doubled many homeowners believe it no longer makes sense to itemize.
Moving Expenses
The new law repeals moving expense deduction and exclusion – except for members of the military.
Casualty Loss Deduction
The new law only allows you to deduct losses attributable to a presidentially-declared disaster.
Despite all of these changes homeownership remains beneficial.
Content curated by The Bucher Group Greater Austin’s most innovative real estate team. The Bucher Group with Austin Portfolio Real Estate of Keller Williams offers unparalleled service to ALL clients in the Austin Texas real estate market. Your complete satisfaction with our service and representation is our number one priority.
The Bucher Group serves the entire Austin Texas real estate market including the surrounding areas of Cedar Park Dripping Springs Georgetown Lago Vista Lakeway Leander Liberty Hill Pflugerville Lake Austin Lake Travis and Round Rock.
