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What does Trump’s New Tax Plan mean for housing?

What does Trump’s new Tax Reform mean for housing?

On December 22nd, 2017, President Trump signed into law the new Tax Cuts and Jobs Act. There were many changes implemented into the tax code for 2018 and beyond. Wondering how these changes might affect you as a homeowner or soon-to-be homeowner? Although I am not a licensed CPA and this is not intended to be definitive tax advice, here are some highlights:


The good news:

  • Tax rates lowered for most people
  1. Single filers:taxable income between $38,700 – $82,500 drop from 25% to a 22% tax rate
  2. Single filers:taxable income between $82,500-$157,500 drop to a 24% tax rate
  3. Married filing jointly:taxable income between $19,050-$77,400 drop from 15% to 12% rate
  4. Married filing jointly:taxable income between $77,400 -$165,000 drop from 25% – 22% rate
  • Standard Deductions nearly doubled
  1. Single filers’ standard deduction goes up from $6,350 to $12,000!
  2. Married filing jointly standard deduction goes up from $12,700 to $24,000!

The bad news:

  1. Personal exemption has now gone away (was approx $4,150/person)
  2. Mortgage interest deductibility has been limited. (Maximum mortgage amount for first and second homes now capped at $750,000 for deductions)
  3. Home equity mortgage interest is no longer deductible
  4. Property tax deductions have been limited. Now the total tax deduction (State, local, sales, property taxes) is capped at $10,000
  5. Unreimbursed employee moving expenses no longer deductible (except active duty military moves)
  6. Miscellaneous deductions eliminated (tax preparation, unreimbursed employee expenses, etc)


The net effect of these changes will discourage taxpayers from itemizing, and push more toward the standard deduction. While only about 30% of U.S. taxpayers itemize currently, one of the nice benefits of home ownership has been the ability to write off mortgage interest, property taxes, etc.


These deductions often allowed a taxpayer to benefit from itemizing, opening up their ability to write off charitable contributions, medical expenses, etc. The effect of these changes will be to reduce some of the tax benefits of home ownership, essentially making the cost of home ownership more expensive after taxes.


While the other tax changes, reduced tax rates and raised exemptions should offset some of these negative aspects, the housing market will undoubtedly feel the effects, especially in higher cost and higher tax areas of the country. Home ownership is still a great investment, and the Central Texas market is still going strong, with rising values. It’s a great time to be a homeowner!


Call or email me to discuss your personal situation and how I can best help you with your housing and mortgage goals. I’d love to help you or those you care about in any way I can!