Date: December 20, 2017
posted by Jaleesa / Comments: No Comments / Tags: 1031 Exchange, Buying Orange County Real Estate, Historical Homes, Market Conditions, Mortgage, taxes
Wondering how the new 2018 Tax Bill will affect your personal and Real Estate Taxes? Find out now!
Lawmakers in the House and Senate passed tax reform legislation today, paving the way for the bill to go to President Trump for his signature.
Thanks to our good friends at Masler & Associates Certified Public Accountants in Irvine and the National Association of Realtors (NAR) we are able to highlight some of the major items in the new Tax Bill for our clients.
Real Estate Specific Highlights:
Although the final tax reform bill is far from perfect, NAR reports that it is significantly better for homeowners than previous versions.
Last-minute changes to the bill include the following improvements:
– Capital gains exclusion. Current law is left in place on the capital gains exclusion of $250,000 for an individual and $500,000 for married couples on the sale of a home. Both the House and the Senate had sought to make it much harder to qualify for the exclusion.
– Mortgage interest deduction. The maximum mortgage amount for households deducting their mortgage interest has been decreased to $750,000 from the current $1 million limit. The House bill sought a reduction to $500,000. 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 mortgage being refinanced.
– State and local tax deductions. Both property taxes and state and local income taxes remain deductible, although with a combined limit of $10,000. Both the House and Senate bills sought to eliminate the state and local income tax deduction altogether.
– The final bill repeals the current-law 10% credit for pre-1936 buildings, but retains the current 20% credit for certified historic structures (but modified so the credit is allowable over a 5-year period based on a rateable share (20%) each year). The House bill would have entirely eliminated the Historic Rehabilitation Credit.
Other highlights in the bill include:
– Interest remains deductible on second homes, but subject to the $1 million / $750,000 limits.
– The bill keeps deductions for charitable contributions, property taxes, mortgage interest, and retirement savings.
– The new law provides generally lower tax rates for all individual tax filers. While this does not mean that every American will pay lower taxes under these changes, many will. The total size of the tax cut from the rate reductions equals more than $1.2 trillion over ten years. The tax rate schedule retains seven brackets with slightly lower marginal rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The final bill retains the current-law maximum rates on net capital gains (generally, 15% maximum rate but 20% for those in the highest tax bracket; 25% rate on “recapture” of depreciation from real property)
– State Taxpayers can deduct up to $10,000 in state and local taxes. They must choose between property taxes and income or sales taxes.
– Interest on home equity lines of credit can no longer be deducted. Current mortgage-holders aren’t affected.
– It doubles the standard deduction for everyone. A single filer’s deduction increases from $6,350 to $12,000. The deduction for Married and Joint Filers increases from $12,700 to $24,000 6. The bill repeals the Obamacare tax on those without health insurance.
– The bill doubles the estate tax exemption to $11.2 million for singles and $22.4 million for couples.
– It keeps the Alternative Minimum Tax. It increases the exemption from $54,300 to $70,300 for singles and from $84,500 to $109,400 for joint 10. The bill doubles the estate tax exemption to $11.2 million for singles and $22.4 million for couples.
– It lowers the maximum corporate tax rate from 35 percent to 21 percent. Clients who are sole proprietors (Schedule C) may consider forming an entity in 2018.
For a more detailed analysis visit the NAR website.
If you would like to know how the new Tax Bill will affect your family and taxes, feel free to contact Masler & Associates, Certified Public Accountants (949-857-0404). They will be happy to answer any questions you may have!
About Jaleesa Peluso, Orange County Realtor & Certified International Property Specialist
Between the Orange County Canyons to the Coast, Jaleesa and her team successfully connect buyers and sellers & landlords and tenants. Thinking of leasing, buying or selling your home? Call us now at (949)395-0960!
All information provided is provided for information purposes only. Although every reasonable effort is made to present current and accurate information, we make no guarantees of any kind and cannot be held liable for any outdated or incorrect information. We also do not control, monitor or guarantee the accuracy of the information contained in external sites, and do not necessarily endorse any views expressed or products or services offered therein. In no event should Jaleesa Peluso or Berkshire Hathaway HomeServices be responsible or liable directly or indirectly for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any such information available on or through any such site or resource. This information is only provided as a courtesy and may also be subject to change without notice. We are not qualified to provide tax advice, nor are we experts in taxation and we always recommend you speak with a Tax Professional to verify information provided and to find out how the new Tax Bill will affect you.