When it comes to real estate and the passage of the Senate Tax Bill, who wins & who loses?
Regrettably, Real Estate Brokers and Agents may be the Loser:
- A $10,000 cap on the deduction for real estate taxes – thus, no tax incentive to trade-up and pay higher property taxes;
- A change in the holding-period before you can sell your home tax-free: Before it was 2 years, now it will be 5 years – thus, fewer real estate transactions;
- The deduction for interest on home equity debt is eliminated. This may be a slight salvation for real estate sales – rather than remodel with a non-deductible home equity line of credit, owners may choose to find another home that has the features they wish.
Who wins? Owners of Real Estate Rental Property
- If the House version of “pass-through” taxation is ultimately adopted, real estate owners will enjoy a sizeable reduction with all rental income subject to a top tax rate of 25% – currently the top rate is 39.6%.
- The depreciation life will be reduced to 25 years from 27.5 years for residential property, and to 25 years from 39 years for nonresidential property. Also, under the Senate bill, rental property owners will continue to be able to deduct their mortgage interest in full.
While both the House and the Senate have passed similar versions, they still need to agree on a final bill – therefore, the above items are subject to change.
Looking for that perfect cabin, condo or home? Call or eMail Scott for recommendations:
Scott C. Kennedy
Broker-Owner / REALTOR®
(530) 448-3308 – Cell / Direct
P.O. Box 2824 Truckee CA 96160
California Bureau of Real Estate – License #’s: 01431709 / 02002713
NOTE: Data compiled from the Tahoe Sierra MLS is deemed reliable but not guaranteed. Verification recommended. Statistics do not include Sierra County nor surrounding areas.