Tax Reform and How It Will Affect Mortgages: Watch Anthony on the NBC Boston Segment
As you can see from the video above of Anthony Lamacchia in the NBC Segment above, the tax reform bill is a hot topic causing much bi-partisan debate. Here at Lamacchia Realty, we want to be your nonpartisan source of facts! Below is a quick breakdown of what was on the table that was related to Real Estate and how it could affect you this year.
Three main Real Estate items on the table:
- Mortgage Interest Deduction (MID)- The cap on what can be written off is now at $750,000 a year NOT $1 million as it was for many years. So, it came down $250,000. This will have very little impact around the country. However, in high priced states like Massachusetts, New York, and California where jumbo mortgages are much more popular, it is concerning some property owners. In addition, there was talk of getting rid of it completely for second homes and maybe decreasing even more but this did NOT happen.
- Capital Gains tax- There is no change from the present. If you have lived in your home two of the last five years you can sell and pay no taxes on up to $250,000 gain if you are single and $500,000 if you are married. There was a possibility of raising the timeframe to five out of eight years and that would have been a MAJOR problem for the real estate market. If that came to pass, people would have likely stayed in their homes longer which would have brought an already low inventory of homes for sale even lower as thousands of people would have decided to stay put. Fortunately, this did not happen.
- SALT State and Local Taxes– Property Tax write-offs are now capped at $10,000. This is another one that affects Massachusetts, California, and New York more because our prices are higher. Prior to these changes, there hasn’t been a cap on property tax write-offs. For example, if you pay $12,000 a year in property taxes you could write it all off. Now you can only write off $10,000. This will have an impact on some, but it is unlikely to be substantial.