Tax Reform and Real Estate: What’s Changing?

How will tax changes impact the real estate market? Here are a few things we’re keeping an eye on.

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A lot of you have been asking me lately about the tax reform bill and how it will affect the real estate market. Since the majority of homeowners around here are secondary homeowners, it won’t have the same effect on their vacation homes as it will on their primary residences. However, there are a few changes that may affect you that I wanted to touch on today.

First things first—the mortgage interest deduction cap has been decreased from $1 million to $750,000. Since 60% of homeowners around here finance their homes, it will have an impact.

Another part of this tax bill is the limiting of state and local tax deductions. Here in Colorado, our taxes are already so low that it won’t have a big impact. However, for those of you in states where the taxes are much higher, you’ll definitely want to do some homework to see how it will affect your primary and secondary residences.

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Capital gains weren’t touched in the new plan.

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Finally, the capital gains tax is another piece that a lot of people are worried about. Basically, if you’ve lived in a home for two out of the last five years as a primary residence, you can deduct any capital gains up to $250,000 as a single person and up to $500,000 as a married couple. This piece wasn’t touched in the tax plan, which is good news for homeowners.

Click here for a deeper look at the tax reform bill.

If you have any more questions about exactly how these changes are going to affect you personally, don’t hesitate to reach out and give me a call or send me an email. I look forward to hearing from you soon.