How Will the New Tax Bill Affect Homeowners?

How Will the New Tax Bill Affect Homeowners?

capital dome, real estate, tax reform

Only time will tell how the proposed new tax bill will affect homeowners.

None of the details are guaranteed until the final bill is approved.  The details listed below are based on current capital dome, real estate, tax reforminformation.  (Please note:  I’m not an accountant or tax specialist-so consult a pro regarding impact on you personally)

  1. The National Association of Realtors is opposed to the proposed bill and with a very strong lobby in Washington may influence changes to the final bill.
  2. One version of the bill caps mortgage interest deductions on mortgages up to $500,000.  The other bill caps the deduction for mortgages up to $1,000,000.  The final bill may be a compromise.  Mortgage interest deductions are important for homeowners who itemize tax deductions.  Predictions that the proposed bill will convert many taxpayers from filing itemized returns to standard returns (standard deductions) is supposed to ease any potential housing impact.
  3. Capital Gains impact.  Current law allows homeowners to exclude up to $250,000 ($500,000 for married taxpayers) in capital gains if owned your home for at least 5 years and resided in the property for at least 2 of the 5 years.  The proposed law would change the ownership requirement to 8 years living in the residence for at least 5 years.  

Obviously, there are many other items in the proposed bills which may impact the housing market. If and when the final bill is signed, the local Cincinnati real estate market will sort itself out and move on. 

The potential for lower demand for higher priced homes is already happening in the greater Cincinnati area- so it will be hard to point fingers at the mortgage interest deduction as the only reason slower sales.

Best guess.  Tax bills always impact some of us more than others.  It will take some time to digest the final product (assuming we get a finalized bill) but the local housing market will adjust and move on.