Read Why The New Tax Law Is Bad For Homeowners

The Senate and House have passed separate versions of the new tax law. Now, both houses must reconcile their differences in conference committee, where changes could be made. We have a decent idea of what changes will go into effect for 2018 based upon their two proposals. In a nutshell, here’s what to expect:

  • The house wants to lower the cap on mortgage interest deduction from $1 Million to $500k. Senate wants to leave it as-is.
  • Senate bill leaves property tax deduction in place but capped at $10k. For those with higher property taxes than $10k, sorry you won’t get to deduct property taxes higher than that.
  • Under both Senate & House bills you won’t be able to deduct interest on a home equity loan.
  • You will not be able to deduct mortgage interest on a second home, like you can now.
  • If you live in a home for 2 out of the last 5 years, sell it, and make a profit, you can take up to $250k individually or $500k jointly as a married couple in tax free profit. The new bill in both House and Senate will change this so you would have to live in the home for 5 years out of the last 8. This provision will keep people in their personal homes for longer, slowing down the housing market significantly.

Because of the above changes, the National Association of Realtors has warned that home prices could drop over 10% in the following 12 months after the tax bill’s passage. The drop would be most noticeable in markets with higher pricepoints.

https://www.nar.realtor/tax-reform

 

 

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