Special Tax Reform Report from The Amy Owens Team
Keller Williams NJ Metro Group
“I heard some bold predictions… about house prices collapsing and losing 10% to 15% in value. There’s no basis for that.” – Jeffrey Otteau, President of The Otteau Group
On Tuesday, January 9th we had the opportunity to hear Real Estate Consultant, Jeff Otteau, and listen to his insights after an in-depth study of the new tax guidelines. Good news, friends! The facts show that the new tax laws will result in little to no change to our wallets. For some families, the tax laws will result in lower taxes paid. This short summary will present the major changes in store and show what they mean for you.
What has been eliminated:
- The personal exemption of $4,050/person in household is eliminated.
- SALT (state and local tax) deductions are now capped at $10,000, whereas they were previously 100% deductible.
- For loans originating after 12/15/17 mortgage interest deductions are now capped at $750,000 (previously $1mil) for couples filing jointly. For singles the cap is $375,000 (previously $500,000). Note: These figures refer to mortgage amount, not sale price.
- Home equity interest is no longer deductible.
What has been added:
- New tax brackets, the majority of which have been lowered.
- The child tax credit has increased to $2,000/child.
- The standard deductions have nearly doubled. The standard deduction for singles is now $12,000 and for married filing jointly the deduction is now $24,000.
What does this all mean for YOU?
The prospective homebuyer: Interest rates are projected to rise to between 4.5% to 5% by the end of the year. As a general rule, a 1% rise in interest rates equates to 9% lower affordability. New home purchases will now fall under the new tax guidelines. We will see the most impact on single homebuyers and for luxury housing markets.
The current homeowner: The new mortgage interest deductions do not apply to current homeowners. In most cases the increase in the standard deductions combined with the increased child tax credit will offset the cap in SALT deductions. One major change will be that home equity lines will become a less desirable option for homeowners who previously used them to not only make home improvements, but also to fund their children’s college tuition and make other large purchases.
The seller: Pricing correctly will be more important than ever. As interest rates rise and affordability goes down it will be critical to attract buyers to your home based on its compelling price. Until prospective buyers have a clear understanding of the new tax laws (which likely won’t be until they’ve sat down with their accountant) we are projecting to see a slightly softer market in Q1 of 2018. Our Spring market will likely start a little later, but still will be just as robust as we’ve seen the last few years.
Call me to talk with you about what’s new in real estate in 2018. If you have any friends or family who are curious about the towns I work in I would love to be introduced to them. A referral is the best compliment and much appreciated.
Call 201-396-2927 or email firstname.lastname@example.org
Disclaimer: The information contained in this newsletter is compiled from public records, contributory databases and proprietary analytics. Its accuracy is dependent upon these sources. Please consult your accountant for clarification of any questions.