3 Tax Law Changes to Know

What were the major changes made to the new tax code? I’ll break them down right here.

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As you’ve more than likely heard by now, a new tax code was placed into law at the end of 2017. But what’s new about this tax code? What impact will it have on the real estate market?

There were three major changes proposed to the tax code:

1. Changing the requirements for the exclusion of gain on the sale of a principal residence. The original proposal was that owners would need to live in their house for at least five of the last eight years to claim this exemption, but the new tax code ended up foregoing this change; owners still only need to have lived in their house for at least two of the last five years. Because the change was avoided, this will have no impact on the market.

2. The reduction on the limit of the mortgage interest deduction (MID). Originally, the proposal was to reduce the limit on the MID from $1 million to $500,000, but the limit on deductible debt was actually reduced to $750,000 for loans taken out after December 14, 2017. Assuming a 20% down payment, this will only impact buyers purchasing homes between $938,000 and $1,250,000.

The elimination of SALT deductions would have been tremendously detrimental to real estate had it passed.

There are two opposing opinions about how much this change will affect the market as a whole. Calculated Risk’s Bill McBride says that it will have very little impact on the housing market. However, Capital Economics suggests that “the impact on expensive homes could be detrimental, with a limit on the MID raising taxes for those that itemize.” 30% of all Americans itemize, so those who don’t will receive a big tax break.

3. The elimination of the state and local tax deduction (SALT), which includes property taxes. This would have been tremendously detrimental to real estate had it passed. Instead, the new tax code allows an itemized deduction of up to $10,000 for SALT, so, while it wasn’t eliminated completely, it was still limited.

Bill McBride says, “SALT will have an impact on housing in some areas. Some people might choose to live in one state over another based on taxation. This could impact demand in certain states.”

So what does all of this mean to you? To understand how the Tax Cuts and Jobs Act will affect you personally, be sure to check with your accountant or tax advisor.

Now that you have a better understanding of how these changes might impact housing, if you have any questions about buying or selling your home, consult with a local real estate expert like the Mitchell Group to get the answers you need and deserve.

The Mitchell Group Has a Special Holiday Message for You

Happy Holidays from The Mitchell Group.

The Mitchell Group would like to wish you Happy Holidays, Merry Christmas and best wishes for the new year! We want to thank you all for such a wonderful year. Your support means the world to us and we want thank you from the bottom of our hearts.

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5 Things Potential Homebuyers Should Know

Thinking about buying a home? If so, we’ve got some great tips to share.

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My name is Cara Holt, and I’m a local Realtor here in Ft. Worth. I’m often told by potential clients that they want to buy a home, but they don’t know where to start. I put together a list of five tips to help you out if you’re in the same kind of situation:

1. Select a trusted agent. You want somebody who understands your needs, who can guide you through the process, who knows market strategies, and who can negotiate on your behalf.

2. Select a local mortgage broker. If you don’t have one that you know and trust, I’d be happy to recommend several fantastic local lenders to you. It’s important to work with one because you’ll need to get pre-qualified before going out to look at homes. The pre-qualification will let you know what kind of home you can afford. With record low interest rates, you might be surprised at how far your money can go in this current market.

Don’t sweat the small stuff.
3. Drive around the neighborhood(s) you’re interested in. Drive around and make note of the local schools, stores, parks, as well as your daily commute.

4. Be prepared to make a strong offer. This is where the pre-qualification letter comes in handy. You’ll need one to make an offer because we’re in such a competitive and fast-moving market. Having a knowledgeable agent who can run comps for you and help you write an offer is an invaluable resource as well.

5. Don’t sweat the small stuff. Every home you see will have minor aesthetic imperfections and will need some kind of repairs. Focus on the big picture things. The things that are most important to you and your family.

I’m not just here to show you homes, I’m here to be a guide and walk you through the process hand in hand to make it as stress-free as possible. I highly encourage you to give me a call at (817) 688-2026 or send me an email to Cara@DFWhomeseeker.com if you have any questions at all. I’d love to talk to you about how we take care of our clients. I look forward to hearing from you soon.