How Does The Tax Bill Impact Buyers And Sellers

Dated: 12/21/2017

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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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