Real Estate As We Know it will Undoubtedly Change Forever. What You Need to Know As Both Buyer & Seller
Happy Thanksgiving to all of you. Thank you for making 2017 a successful year for our real estate business. We wholeheartedly appreciate your support, referrals, and trust in us. Thank you!
As we all know, owning a home has traditionally been the hallmark of the “American Dream.” However, the materialization of that dream could be impossible if the recently proposed tax bill goes into effect. This is a reality that could impact all of us — rich and poor, old and young, Republican and Democrat. More than anything, this is a homeowner’s issue. If the proposed tax reform bill passes, real estate as we know it will undoubtedly change forever and the changes that ensue could be disastrous to both seller and buyer.
Under current tax law, for instance, over 30% of American taxpayers — i.e., over 44 million across the nation — are able to itemize their deductions and often benefit from the unique allowances for which they personally qualify. Congress has threatened to virtually eliminate tax incentives for homeowners and other taxpayers via a number of dramatic adjustments to the current system including, but not limited to:
- Elimination of the deduction for state and local income or sales taxes;
- Elimination of property tax deductions;
- Elimination of the Mortgage Interest Deduction for second homes and limitation of the Mortgage Interest Deduction for primary residences;
- Elimination of the deduction for moving expenses;
- Elimination of the deduction for interest on student loans;
- Elimination of the deduction for medical expenses, including those for the elderly;
- Elimination of the deduction for personal casualty losses, such as from hurricanes, earthquakes or wildfires;
- And elimination of the deduction to any teachers who are required to cover the costs of class supplies using their own funds.
Tax incentives are critical for a strong housing market that creates jobs and builds stable communities. With fewer incentives to purchase real estate, the value of real estate nationwide will inevitably decrease. Moreover, the proposed tax system is structured to most severely impact individuals in high-tax states (such as California) who now claim large deductions for state and local income tax, property tax, mortgage interest, and sales tax. The middle class is at risk of shrinking even further as hundreds of thousands of California residents are made financially vulnerable by the elimination of these large deductions they have relied on for years. The average California homeowner could end up paying upwards of $3,000 more in taxes per year under the proposed system. This bill could be passed as early as Thanksgiving.
What can you do to prevent these proposed changes from becoming a reality? Call or email your congressional leader and explain to them the importance of your deductions. This is a real concern that could affect nearly every American citizen in some way and carries the potential to trigger the next major recession.
Stay Tuned for our Monthly Real Estate Roundup article. Thank you and please contact us today for any of your real estate needs!
Randy & Kellie