Author: Cory Thompson
First Tax Reform in 31 Years
With 2018 beginning and the first new tax reform since 1986 being passed called "Tax Cuts and Jobs Act" aka 2018 Tax Reform, I was acutely curious how this may affect potential home buyers and the housing market in 2018. So I did some research. In an honest and non-political attempt to inform this is what I discovered...
Mortgage Interest Deductions Reduced
The most substantial change is that tax deductions for interest paid on mortgages will drop from 1.1 million to 750k. This is only for new loans as existing loans are grandfathered in. Current homeowners are not affected by this new reform. This does mean that new homebuyers taking loans higher than $750k will only receive tax deductions on interest up to $750k.
Most local buyers to the New Hanover County and surrounding areas won't be affected or may only be slightly affected since according to Zillow.com the median listing price for New Hanover County is $299k and Wrightsville Beach median listing price comes in at $833k. The greatest areas affected will be markets with high property values such as New York City and San Francisco where median values are over $1 million.
Tax Breaks will remain for Home Sellers
Tax breaks for people selling a home still remain. You will still be able to exclude up to $500k or $250k for single filers on capital gains as long as you have been a resident of the home for 2 of the past 5 years.
(Disclaimer: this is not a political post. Educational purposes only.)