January 26, 2018
You may have heard: There’s a new tax bill in town. Well, the whole country, to be precise. So what does the Tax Cuts and Jobs Act mean to you as a homebuyer or homeowner starting in 2018? Good question. We found some great answers from some pretty great sources during our most recent surfing expedition.
Please keep in mind that the information and interpretations vary a bit from source to source, so it’s best to gather all the intel you can handle—even beyond what we’ve provided below—and speak with a tax consultant before filing your 2018 taxes to help with your individual situation.
Journal Of Accountancy
For a thorough rundown of the biggest changes in tax law, free from opinion or speculation, it’s the Journal Of Accountancy for the win.
National Association Of REALTORS®
REALTORS® naturally are interested in, and impacted by, how the new tax bill relates to housing. In fact, the National Association Of REALTORS (NAR) lobbied to affect positive change for homebuyers and homeowners.
Key takeaway: NAR is now projecting slower growth in home prices of 1-3% in 2018 as low inventories continue to spur price gains. However, some local markets, particularly in high cost, higher tax areas, will likely see price declines as a result of the legislation’s new restrictions on mortgage interest and state and local taxes. Happy reading.
First-time homebuyers: Take note! Forbes and NAR are optimistic that homebuying newbies could benefit from the new tax bill, and buyers of low and moderately priced homes may not be negatively impacted. That means Home Is Possible participants!
Key takeaway: While homeowners in very high-tax areas (ie New York, New Jersey, Connecticut, Maryland and California) may see a reduced overall deduction, for Nevadans, the new $10,000 combined limit is still a good deal. Happy reading.
CBS & Capital Economics
CBS and Capital Economics both explore the question: to buy or to rent given the new tax bill. Spoiler alert: In most cases, they say it’s still more advantageous to buy.
Key takeaway: Although the legislation caps deductions for property tax at $10,000 per year and lowers the ceiling on the debt level you can deduct interest costs on (now $750,000 instead of $1 million), the math shows that owners of average homes won't be worse off. Happy reading. And more happy reading.
We thought it’d be smart to see what tax professionals are saying about the new bill. H&R Block takes a look at itemizing in 2018, something homeowners and homebuyers should pay attention to since housing has historically been one of the biggest itemizations.
Key takeaway: Mortgage interest remains deductible – with two important changes. First, for mortgages taken out after December 14, 2017, only the interest on the first $750,000 of mortgage debt is deductible. Second, interest on home equity loans will no longer be deductible. Happy reading.
All Politics Aside
We admit we were sweatin’ a bit through the negotiation process of the Tax Cuts and Jobs Act. In the early stages, Mortgage Credit Certificate programs were on the chopping block. We are very happy to report that our MCC is alive and well, and we’re ready to help more first-time homebuyers, veterans and military personnel save money on their federal taxes annually. Phew! Simply contact a HIP-qualified lender to get started.