5 possible real estate ramifications of the tax law

While there has been a great deal of disagreement and dispute regarding the proposed tax legislation (apparently soon to be adopted), there is no doubt that real estate will be among the most important. affected entities and components of the US economy. The National Association of Realtors (NAR) has opposed these proposals, fearing adverse ramifications, in the industry, etc. Although, no one can be sure what will happen in the future, this article will briefly try to discuss, consider and evaluate 5 possible/potential ramifications of this law, once enacted, on things related to real life. farm and housing.

1. Limiting real estate tax deductions will hurt prices, etc.: The law has significantly changed how state and local taxes (known as SALT), which include income tax, sales tax, and real estate taxes, are handled from a tax perspective. Currently, these taxes are deductible from the federal return, for many reasons, including the overwhelming agreement above, not doing so is a kind of double taxation and would hurt the real estate market. When potential buyers can’t fully deduct them, but instead are capped at $10,000, many markets are affected, more so than others. In states like New York, New Jersey, Connecticut, Massachusetts, California, New Hampshire, and Texas, real estate and/or the combination of these with income taxes, homeowners will find that their income tax is likely to increase. This affects the media too much, and High average- income citizens, to a disproportionate degree! Logic should indicate that when benefits are reduced, home prices will decline in value (many economists claim by 10% or more).

two. More potential homebuyers could choose to rent, rather than buy: While single-family home prices and sales may be affected, multi-family rental properties could potentially benefit. However, if this causes a significant increase in demand for income properties, it could cause higher sales prices, resulting in higher rents for tenants. Potential buyers will always consider the comparative benefits of owning versus renting, and this can make a significant difference in perspective.

3. Benefits of owning a rental property: While real estate tax deductions for your personal home are capped, they are not for income properties. Also, if more people are looking for rentals, the associated risks involved in buying and owning rentals are reduced.

Four. Negative impacts on specific local economies: The New York City metro area, especially Long Island, will be hit hard when this becomes law. Newsday’s states, Long Island, will be hurt, far more than anywhere else, by property taxes and income taxes, and the $10,000 limit is a trifle, relative to reality.

5. Sales of high-end/priced homes could be affected: While these homeowners have the same potential challenges as others, their potential resale values ​​could suffer significantly due to the cap on the mortgage interest deduction. This legislation will bring with it the ability to deduct only the interest on a maximum new mortgage, up to $750,000.

An evaluation of this legislation should indicate, while some middle-class people, in certain areas, might benefit slightly (estimates are, roughly 1% lower income taxes – this means that for someone who owes $10,000 per year, in federal taxes, about $100 savings, or $2 a week), most of the perks go to wealthier people, due to lower top brackets, higher levels of estate taxes, and a significant reduction in corporate taxes. Beware, the real estate market will probably be the biggest victim and once again politicians refuse to imagine and consider the ramifications of their politically motivated actions!