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Tax Reform's Impact on Real Estate


The 2018 Tax Reform Act that was signed into law at the end of 2017 impacts:  Individual Tax Rates, Standard Deductions/Personal Exemptions, Child Tax Credits, Itemized Deductions and other items. 

Some of the things that will affect most homeowners and potential home buyers are the following:

  • The limit on deductible mortgage interest has been capped at $750,000 for loans made after 12/14/17. Existing loans of up to $1 million are grandfathered in and are not subject to the new $750,000 cap.
  • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the existing mortgage being refinanced.
  • Property Taxes and other state and local taxes are capped at $10,000 as itemized deductions.
  • The Estate Tax Exemption is now $11.2 million.
  • Capital Gains tax, depending on your tax bracket, has been decreased.
  • Rental income is subject to the tax payers Qualified Income, which could be a benefit for investors
  • The standard deduction is now $12,000 for single individuals and $24,000 for joint returns. It is estimated that over 90% of taxpayers will elect to take the standard deduction.
  • Moving expenses are repealed except for members of the Armed Forces.
  • Casualty losses are only allowed provided the loss is attributable to a presidentially-declared disaster.
  • The capital gains exclusion applying to principal residences remains unchanged. Single taxpayers are entitled to $250,000 and married taxpayers filing jointly up to $500.000 of capital gain for homes that they owned and occupied as principal residences for two out of the previous five years.


This article is for information only.  For tax or financial advice as it pertains to your individual situation always consult a tax and/or financial professional.

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