Real Estate Watch – Berkshire Hathaway
Tax Reform Impact on the Real Estate Market
There has been much discussion on President Trump’s desire to get his tax reform initiative passed before the end of the year, and some of the components being considered could have an impact on our real estate market.
While the push is to get a tax bill approved before New Year’s Day, the two versions from the House and Senate have enough differences that most experts feel we may not see something passed until next spring, with the impact possibly not being seen until 2019.
The Senate version currently leaves the interest deduction alone, staying at the max loan level of $1.0 million. In the House version, the maximum deductions allowed are for loans of not more than $500,000. As we all know, with average home prices in Carlsbad, loans in excess of $500,000 are very common.
The significant value of being a home owner versus a renter has three major components: 1. As home values increase over time, the home owner gets to recognize the appreciation. 2. While every monthly payment to the bank includes interest, a portion is also principal – which means you pay down your debt with every payment. 3. Both property taxes and mortgage interest are tax deductible (current max is for loans up to $1.0 million). In the tax reform bills being debated, a major item being discussed is “how much” mortgage interest will remain as a tax deduction.
I’m not sure where this will land as much debate is anticipated within the walls of Congress over the next month. But as a Realtor and home owner, I’m never in favor of any initiative that may potentially have a negative impact on home ownership. If you feel the same way, be sure to express your opinion to your congressman and senator. And of course, if you have any specific question on how the tax reform bill may affect your home ownership and income tax, be sure to contact your paid tax preparer.
Realtor • CalBRE# 01377312
7030 Avenida Encinas, Suite 100, Carlsbad, CA 92011
Al Rex has been a top selling realtor in Carlsbad for the past 14 years, where he and his family reside. Visit his website at www.carlsbadhousefinder.com to get updated MLS information, or to find a floor plan for your own home.