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New Tax Bill & California Housing Market

Posted by Admin on January 24, 2018
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Will The New Tax Bill Cause California Housing Prices to Drop?

The recently passed tax bill may affect the California Housing Market. Since 1986 the tax code has offered rewards for homeownership. This is one of the first reworks of the tax bill announcing significant changes. Mortgage interest and property tax deductions will be reduced increasing many homeowners’ monthly housing costs. Society encourages home ownership assuming we are better off with owners instead of renters. Is society encouraging the right things as we experience changes such as the Tax bill?

Intempus Realty is dedicated to helping clients make educated and profitable real estate decisions. Planning ahead for real estate market and legal changes can make all the difference on how they will affect you. This controversial tax bill raises concerns about its impact on the housing market. The good news is party lines are split down the middle for voting and taxpayers are watching; much different than the 1986 tax bill. So will California housing prices drop? Does the tax bill offer more advantages or disadvantages for buyers and homeowners? The National Association of Realtors (NAR) raises awareness that housing prices will drop with the bill in effect.

Zillow, a credible online real estate marketplace, released a well-researched analysis of the plan. Their analysis shows that currently half of American homes have enough value to make sense of itemizing mortgage interest and property taxes. The Tax legislation could drop that number to close to 14 percent.

LINK ANALYSIS OF PLAN, if you want: https://www.zillow.com/research/mortgage-interest-deduction-750k-17620/

Lower Corporate Tax Rates & Higher Wages…

The new plan could potentially benefit some more than others. Americans, Small Business, and pension plans may benefit the most.

 

How Will Taxpayers Benefit From Tax Bill?

  • Increase in standard deduction (roughly doubled). Fewer homeowners will qualify for preferential tax treatment.
  • Increase and expand child tax credit and Dependent Care Credit.
  • Potential to deduct student loan interest.
  • Capital Gains taxation (long-term). If less than 77 K no tax applies. 77 K to 479 K incomes are 15%. Anything beyond is 20%.
  • 1031 remains unchanged.
  • 250 / 500 exclusion on the sale of a personal residence remains unchanged.

The Downside of Tax Bill

#1 Deductions for Home Equity Lines of Credit are no longer available. Some exceptions may apply such as potential equity reinvested, used for rehab purposes, or purchase money.

#2 New homebuyers can only deduct interest on the first $750,000.  Previously, the threshold was $1 million. The lower cap will not affect current homeowners.

Need Help Ensuring Real Estate Investments Remain Profitable?

Take advantage of the coming year to plan ahead for changes with the help of Intempus Realty. Avoid the mad dash at the end of the year. To receive the greatest return from real estate investments you should always stay ahead of the market, or at least try to. Thus far we don’t see large increases in tax to pay. Most of the lost “write-offs” will be offset by lower tax rates and higher standard deduction.

The market is full of swings and surprises. It always will be. For 13 years and counting Intempus Realty has been helping clients, homeowners and investors, stay ahead of the market. Our goal is to maximize property value, investment returns, and provide necessary information for you to make educated decisions. You can count on us to provide top-notch real estate brokerage services including real estate sales, property management, and mortgage origination. Whether you are in search of your dream home, trying to obtain the most profitable sales offer on your home, or investors looking to maximize returns, Intempus is here for you. We promise to provide the highest quality services that exceed expectations today and always.

Some other articles I used:

https://www.forbes.com/sites/kellyphillipserb/2017/12/01/realtors-predict-tax-bill-will-cause-housing-prices-to-drop-in-every-state/#75c1672830fb

http://money.cnn.com/2017/11/14/real_estate/house-senate-tax-reform-homeowners-buyers-seller/index.html

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