I wanted to take a few minutes and address the concern and misinformation as it relates to Real Estate and the new Tax Bill. There has been a lot of speculation that the provisions of the bill will reduce the desirability of home ownership and therefore damage the Real Estate market.
The reality is that Real Estate faired quite well in the FINAL BILL with some positive changes literally occurring on the last night. The key points are as follows:
- Interest is still deductible on loans up to $750,000 on BOTH first AND second homes (not up to $500,000 and on primary residences only, as first proposed).
- We retained the Exclusion of Gain on the sale of a Principal Residence for owners who have lived in their homes for 2 out of the last 5 years (not 5 out of the 8, as initially proposed).
- The 1031 Exchange structure was retained as-is with no loss of benefits for our Investor Clients.
- The Bill also retained Mortgage Credit Certificates in full.
There are a lot of provisions in the Tax Bill that will help lower-income and middle-class taxpayers as well as additional provisions that will benefit corporations. Some upper-income taxpayers will pay more, particularly in California, but none of these provisions will directly impact Real Estate.
In conclusion, people buy homes because they need a place to live or vacation. Tax benefits are not the primary reason for most buyers. With the provisions we retained in the Bill, I expect to see little-to-no negative impact for Real Estate investors & home buyers, to your sales, or to our business in the future.
In fact, if the Tax Bill does stimulate employment and higher-incomes, it could have a huge positive benefit for Real Estate!