Here’s what’s been going on in our greater Palm Springs area real estate market.In the greater Palm Springs area, we continue to be in a very strong seller’s market. To illustrate that, we
4 Ways The New Tax Bill Will Impact The Real Estate Market
Dated: February 6 2018
The New tax reform will impact the real estate market in four key ways. These changes indicate that now might be the time to start the process if you’re thinking about selling in 2018.
I’ve gotten a lot of questions recently about how The Tax Cuts and Jobs Act will affect the real estate world. There are four key tax changes that will impact the housing market:
1. Deductions for property taxes. Prior to the new tax bill, if you itemized deductions on your federal return, you were able to deduct the entire property tax bill along with any state income taxes. Going forward, this total amount will be capped at $10,000.
2. Deductions for mortgage interest. The final tax bill reduces the limit on deductible mortgage debt to $750,000 for or new loans that were taken after December 14, 2017. Other loans of up to $1 million prior to that time are grandfathered in.
3. Exclusion for capital gains. Previously, if sold your home and turned a profit, then up to $500,000 of that profit was exempted from the capital gains tax if you were married and had lived in the home for two out of the last five years. There was some concern that this rule would be changed so that you had to live in the home for five out of the last eight years, but no change occurred. You still only need to live in the for home two out of the last five years in order to claim this exemption
4. The deduction of moving expenses. You used to be able to deduct your moving expenses if you moved for a job, but the final bill repealed this rule and modified it so that you can only deduct your moving expenses if you’re a member of the U.S. armed forces.
The first two changes increase taxes on current homeowners who itemize. Therefore, they might make homeownership a little less attractive. This is why the NAR stated that we would see a 10% drop in prices in 2018. On the other hand, the last change makes it more expensive to sell your home. As a consequence, there may be more homes not coming on the market.
We’ll have to see how things play out, but there seems to be a consensus among experts that these reforms might drive home prices down in the midterm.
On the bright side, sellers still get to keep the capital gains exemption, which is a huge win for real estate. If you’re thinking about selling your home in 2018, now might be the right time to start the process.
If you have any other questions about these changes or you need help buying or selling a home in our market, feel free to call or email me. I’d be glad to help you.
Ranked in the top 1% of all agents valley wide and named one of the Palm Springs Life Top Realtors for 2019 and 2020, Will is an Associate Broker/Team Leader of the WILL COOK GROUP with Keller William....
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