3 Tax Changes to Be Aware Of

There have been a lot of changes to the real estate market lately in terms of tax law. Here are a few things you should be aware of as a homeowner in the new year.

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Before I get started with explaining some of the recent tax code changes, I want to first say that I am not a CPA. What I say here might not be 100% accurate, so you should check with your CPA or tax professional before making any decisions. Without further ado, here are the three most important impacts that the tax reform bill is having on the real estate market:

1. Property tax write-off cap. You used to be able to write off all of your property taxes. However, the new tax laws cap this amount at $10,000. That’s a lot of money in a lot of states, but it doesn’t go quite as far in places like New York or San Francisco. Homes are priced well above the $1 million market in many cases, so most of those people are spending far more than $10,000 in property taxes.

You can only write off $10,000 of your property taxes with the new bill.

2. Mortgage debt. In the past, you were able to write off all of your mortgage interest. If you borrowed $1 million to buy a home the entire mortgage interest of that $1 million could be written off. That number is now capped at $750,000. This is another change that will impact our market a lot more than others because of the high prices.
3. Capital gains exemptions. Nothing has changed here. There were whispers of tighter requirements, but you still only have to have lived in your home for two of the last five years to claim your capital gains exemption. If you're single, you can write off $250,000 of the profits from a sale. If you’re married, that number jumps to $500,000.

That's all I have for you today. If you have any questions for me in the meantime, give me a call or send me an email. I look forward to hearing from you soon.

Please contact a CPA or tax professional for additional, verified information.