We had a complete tax overhaul. Given the fact that other than death, taxes are the only other guarantee in life, it's worth gaining a very clear understanding of the new tax plan. The following are bullet points of the changes.
- Mortgage Interest Deduction Reduced
- $1 million deduction reduced to $750,000. However, current loans were grandfathered in
- Mortgage Interest Deduction was retained on second homes
- No Mortgage Interest Deduction on Home Equity Debt unless proceeds are used to substantially improve the property
- changes expire at the end of 2025
- State and Local Tax Deduction Capped at $10,000
- Combined cap of $10,000 for property taxes, state taxes, local taxes and sales taxes
- $10,000 is true for both single and married people
- Standard Deduction Almost Doubled
- Single people went from $6,350 to $12,000
- Joint/Married people went from $12,700 to $24,000
- Congress focussed on increasing standard deductions rather than incentivizing homeownership
- Capital Gains Exclusion Period Retained
- Exemption if you've lived in your home for the last 2 out of 5 years
- single: $250,000
- married: $500,000
- Moving Expenses
- Deduction association is repealed for everyone except armed forces on active duty
- Changes in Commercial and Income Properties
- 1031 exchange is limited to real property and like for like
- depreciation periods retained
- 39 years for non-residential
- 27.5 years for residential
- 15 years for qualified improvements
I'll be sure to discuss the impacts of these changes and what potential trends we can expect out of the marketplace for 2018 as a result.
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