How does The Tax Cuts and Jobs Act impact real estate? I’ll go over a few important things you need to know today.
Happy New Year! As you all know, we have some new rules for taxes in 2018. I’ll go over how some of these changes impact you as far as real estate goes.
As always, please check this information with your accountant or CPA.
The mortgage interest deduction is still allowed, except the new cap is $750,000 instead of $1 million. Earlier versions of the tax bill could have been a lot worse, so this is pretty good news.
If you have a second mortgage or line of credit, then you can no longer get a deduction on that anymore. If you are in Maryland, pick up your phone and give me a call. We can move that into your first mortgage and maybe set you up for a tax advantage there.
There is no longer a deduction for second homes.
Investors still retain investment deductions, so check with your accountant about that.
The mortgage interest deduction is allowed up to $750,000.
The capital gains tax exclusion remained the same. You have to live in a property for two out of the last five years to avoid paying capital gains tax on your property. The cap is still $250,000 for single taxpayers and $500,000 for married taxpayers.
The local deduction cap is $10,000. That is not my area of expertise, so check with your accountant with any questions about that.
All in all, this is pretty good news. You still have the mortgage interest deduction that you can take up to $750,000.
If you have lower lines of credit with maybe 10% to 15%, you can probably stick with it and pay it off.
Now, I’ve owned this company for 18 years and been in this business for a long time. The prime rate was 8.25% before the collapse, and then it slowly went to zero. However, when it goes up, it goes up quickly. If you have one of those lines of credit and you owe $25,000, $30,000, $50,000, or $100,000, pick up the phone and call me. I am happy to help.
As always, please don’t hesitate to reach out to me. I look forward to hearing from you at Ability Mortgage Group
