Many of my clients are asking how the Tax Laws are changing Real Estate regarding homeownership, buying a home and investing in Real Estate. In general, the new laws will not take away any homeowner benefits and the final legislation might actually help homeowners and investors.
The exclusion for capital gains on the sale of a home have remained. If the bill was passed, the amount of time a homeowner would have had to occupy a home would have gone from 2 years to 5 years to qualify for the exclusion. Taxpayers with income over $250,000 would have lost the capital gains exclusion all together. There will be restrictions on mortgage interest and State and Local taxes but here locally we will not feel it as bad as some states with higher property and income taxes. Locally we have lower taxes and that might help to encourage buyers to move from states where the taxes are much higher and make owning a home here in Cape Cod more affordable.
The final bill reduces the limit on deductible mortgage debt to $750,000 for loans after December 14, 2017. Current loans up to $1 million are grandfathered. Interest on home equity is still deductible but proceeds need to substantially improve the home.
Mortgage interest remains deductible on second home but also is subject to the $750,000/ $1 million limits.
State and local taxes that are itemized are deductible up to $10,000 for total state/local /income taxes. The $10,000 applies to both single and married.
For homeowners that rent properties there was a bill introduced that would of subjected rental income to self-employment taxes but thankfully that provision was dropped.
If you have questions or need information about the new tax laws, please contact your accountant or financial advisor.
If you would like information regarding the market here in Cape Cod please contact Denise Kopasz, Broker- William Raveis Real Estate. [email protected]