With the new tax laws taking effect as of December 2017, it seems the entire nation has been in a scramble to figure out just how the changes will affect them, their families or businesses. As a real estate agent , industry tax changes and small business taxation are two things of which you need to be aware.<\/p>\n
Get a sneak peek from industry experts and insiders on how these new laws can and will affect you as an agent and potentially the real estate industry as a whole. Keep in mind that the insights below are intended to help you begin to get a handle on the new changes, but they do not take the place of personalized advice from a knowledgeable tax professional or financial adviser.<\/p>\n
One of the biggest changes directly impacting the real estate market is the change in mortgage deduction. Current mortgage holders will be grandfathered in, \u201cbut the deductible limit drops to $750,000 for new debt incurred after Dec. 31, 2017, according to factcheck.org.<\/p>\n
How much will this really affect the industry? It\u2019s hard to say. \u201cThe areas that are most impacted by the cap on mortgage interest deductions \u2013 high priced coastal cities such as San Francisco, Los Angeles and New York \u2013 are all areas that have had incredibly strong buyer demand over the past several years,\u201d says Mark Biggins, managing broker, Open Listings. \u201cWhile there are certainly buyers who may have lowered their budget, or hit pause on their home search altogether, we are still expecting demand to outpace supply as we enter the selling season.\u201d<\/p>\n
\u201cHomeowners will no longer be able to deduct interest paid on home equity lines of credit (HELOC) that are not considered home acquisition debt,\u201d says real estate attorney Elizabeth Whitman. She goes on to explain that this will likely impact many homeowners as interest deductions on HELOC loans will only be allowed if funds are used to \u201cacquire, build, or substantially improve their residence.\u201d<\/p>\n
The glory days of the past few years may be coming to an end, according to Senada Ad\u017eem, luxury real estate expert and media contributor. She says \u201cMortgage [interest] rates are expected to average 4.6 percent throughout the year, but are expected to reach 5 percent for the 30-year fixed-rate mortgage by the end of the year. This is due to stronger economic growth, inflationary pressure and monetary policy normalization.\u201d<\/p>\n
\u201cThe removal of tax deductions for state and local income tax will cause a southern migration by empty nesters,\u201d says Ad\u017eem. \u201cHigh-tax states like New York and Connecticut will see people leave for Florida, Nevada and Texas, the three sunny states with no state income taxes. It is Florida\u2019s six-months-and-a-day rule that will be even more important for Northeasterners.\u201d<\/p>\n
This is one area that may impact you personally. Depending on how you receive income and file your taxes, this could be a major player in helping lower your own taxes.<\/p>\n
\u201cReal estate brokerage firms and real estate agents should be aware that the new tax law now will allow small businesses pass-throughs (taxed as S corporations, partnerships or individuals) to deduct 20 percent of their income, subject to limitations,\u201d says real estate attorney Elizabeth Whitman. \u201cThis change is expected to apply to independent contractors who receive forms 1099 (like most real estate agents) but not to W-2 employees.\u201d She advises talking with a tax adviser on how to structure your business in order to take advantage of these new changes and notes that phase out for this deduction does occur.<\/p>\n
Overall, time will tell how tax reform truly affects the housing market; some seem to see dire consequences, while others see little to no change. Staying informed and up-to-date on industry-related news and trends is still one of the best ways to ensure your business thrives and your clients are in educated hands. Charity Malmberg<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" With the new tax laws taking effect as of December 2017, it seems the entire nation has been in a scramble to figure out just how the changes will affect them, their families or businesses. As a real estate agent , industry tax changes and small business taxation are two things of which you need […]<\/p>\n","protected":false},"author":12,"featured_media":1757,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10,5],"tags":[],"class_list":["post-1755","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-columnists","category-twin-cities"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/posts\/1755","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/comments?post=1755"}],"version-history":[{"count":0,"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/posts\/1755\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/media\/1757"}],"wp:attachment":[{"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/media?parent=1755"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/categories?post=1755"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/realestateagentmagazine.com\/wp-json\/wp\/v2\/tags?post=1755"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}