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How Does The Tax Bill Impact Buyers And Sellers
How Does the Tax Bill Impact Buyers and Sellers?
There were several provisions in the new tax bill that will have a direct impact on residential real estate. Over the last few weeks, there were many speculations on where many proposed changes would land.
Change in Standard Deduction: the standard deduction will increase to $12,000 for single filers and $24,000 for joint filers. Many homeowners will no longer need to itemized deductions.
Mortgage Interest Deductions: the new cap is set at $750,000 for loans after Dec 14 but will remain at $1Million for loans prior. This limit will also include second homes.
Capital Gains Exclusion: If you have lived in a residence for two of past five years, you can exclude $500,000 for joint filers and $250,000 for single filers. Earlier proposals would have required longer residency requirements.
State and Local Property Taxes: Limits for deduction are now capped at $10,000.
Moving Expenses: Only deductible for military moves, eliminated otherwise for job relocations.
Casualty Loss Deduction: Must be from a result of Nationally Declared Disaster, individual instances no longer deductible.
Estate Tax: The new law doubles the estate tax exemption to $11.2 Million.
Low Income Housing Tax Credit: Remains at 4%. Funds about 30% of all affordable housing construction.
Historic Tax Credit: In place since 1981, provide a 20% credit when a certified historic property is placed into service is now spread over multiple years.
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