What Does the New Tax Law Mean for Your Housing?
What Does the New Tax Law Mean for Your Housing?
With the new tax reform bill finally in the books, the time for fighting over the bill is over. Now it’s time to let the fight over how it’s going to affect taxpayers, begin. There’s no question the new law is going to affect nearly all taxpayers, as well as several industries. How much effect it will have is a big question. One industry that could see great change is the housing industry, as well as homeowners in general. How much you’re affected depends on several key factors, including where you live, your housing budget, and how the new tax laws affect your overall tax bill.
Mortgage Interest Deduction
Let’s start with the mortgage interest deduction. This is by far one of the most popular deductions every year and millions of taxpayers take advantage of it. However, with the new bill in place, there will be changes. The deduction still exists, but if you purchase a home between now and 2026 you can only deduct the interest on any mortgage worth up to $750,000 or less. For those who bought their home before December 14, 2017, the cap will still be $1 million. For those who buy more expensive homes that is a significant difference. That means many wealthy homeowners, as well as people who live in states and cities with more expensive housing, will be affected. It also could discourage wealthy homeowners from moving away from their current homes.
State and Local Tax Deductions
Another big controversy in the new law has been the reduction of state and local tax deductions. Before the tax reform, taxpayers could deduct all state and local property taxes on their return. Furthermore, taxpayers could also deduct state and local income taxes or state sales taxes. Under the new law, all of these taxes are lumped together and taxpayers can only deduct up to $10,000 total, no matter your filing status. While this will not affect every taxpayer, for people who live in high-tax states like California, New York, Connecticut and New Jersey, the change will be costly. That’s because $10,000 doesn’t come even close to covering these taxes for many taxpayers in high-tax states.
States Are Fighting Back
This part of the bill has been so controversial that many state governments are trying to create ways to circumvent the bill. California, for example, has already introduced legislation that would allow taxpayers to make “charitable contributions” to the state instead of tax payments. That’s significant because the bill does not put a limit on deductions for charitable donations.
What About Everyone Else?
For those who own a modestly priced home or live in areas of the country with smaller housing and tax bills, the news is still not all good. That’s because the standard deduction has also gone up to $12,000 for individuals and $24,000 for married couples. The increase sounds attractive, but it also means that many taxpayers’ itemized deductions will now be less than the standard deduction. Therefore, they won’t be able to take advantage of itemizing their state and local income tax and mortgage interest deductions.
Good News For Capital Gains on Home Sale
There is at least one piece of good news. Anyone who sells their home can exclude as much as $250,000 in capital gains from the sale of that home (up to $500,000 if married).
We hope you found this article about “What Does the New Tax Law Mean for Your Housing?” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
To receive our free newsletter, contact us here.
Subscribe to our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.
Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
Richard Rossi, Founder of daVinci50: The Man Behind The Age Reversal Revolution
Watch Richard Rossi’s recent interview with Alan Olsen: https://groco.com/featured-guests/mastering-age-reversal/ Richard Rossi is a revolutionary figure in the field of age reversal, with his company daVinci50 leading the way in exploring new treatments to combat aging. His research into stem cells and gene therapy has opened up exciting possibilities for reversing the effects of aging, while…
Mastering Age Reversal with Richard Rossi
Transcript: Richard Rossi And I don’t know if you remember the day, chat GPT first came on your radar. For me, it was my birthday, the 13th of January of this year. And I’ve never gotten through a day since where the word chat GPT, or AI has been uttered by someone and one of…
Unlocking Optimal Nutrition Strategies for Health and Well-Being with Renowned Nutritionist Ken Neumann, Founder and CEO of Youtopia
See Ken Neumann’s recent interview with Alan Olsen: https://youtu.be/wJF155EiM8I Nutritionist Kenneth Neumann is a renowned expert in the field of health and nutrition, having spent years researching and developing innovative strategies for optimal nutrition. As founder and Chief Executive Officer of Youtopia, he has dedicated his life to helping people unlock their full potential through…
Using Nutritionists to Prepare Meals Personalized For You
Interview Summary: As Ken Neumann wanted to share his God given talents with others, he started a business called, “Youtopia”. It started off as a simple question, “Is there a way to increase the nutritional value for those who have some type of health disorder?” Like a chain reaction that gave way to creating a…