Buyers who have been concerned about what might happen to the tax laws affecting home ownership should feel more comfortable about moving forward with their decision to purchase. The 2017 Tax Cut and Jobs Act passed by Congress and signed by the President continues to treat real estate as a favored investment.
Whether it is for a home to live in as your principal residence or to use as rental property, the tax laws are in place, but some other dynamics to be concerned with are not status quo; mortgage rates are expected to continue rising, as are home prices.
Reasons to buy now:
- The mortgage interest deduction is intact for most taxpayers.
- The capital gain exclusion for principal residences up to $500,000 remains in place.
- Taxpayers can elect annually to take newly increased standard deduction or itemize deductions whichever will benefit them the most.
- The house payment with taxes and insurance is most likely cheaper than the rent.
- Rents are anticipated to continue to rise, making the difference even greater in the future.
- Lock-in the principal & interest payment with a rate still in the historically very low range.
- 30-year mortgage terms are available to most borrowers.
- Prices will likely increase due to continued low inventories of existing homes for sale and more than several consecutive years with a low rate of new home construction.
- Section 1031 exchanges, capital gains and depreciation remain the same for rental properties.
For a summary of specific real estate provisions in the 2017 Tax Cut and Jobs Act, click here.