Well, by the time you read my column, the new tax overhaul plan will be law, unless there is a stall in the Congress or Senate.
How will the new plan have an effect on residential real estate you ask?
Well, first off you will only be allowed to deduct up to a total of $10,000 of real estate taxes, state or sales taxes.
Many of us are paying much more real estate taxes, especially in and around the North Shore of Nassau. However, there will be no change for deductions on existing mortgages, how-ever, going forward, real estate loans on primary residences will be allowed to deduct up to a maximum of$750,000 of interest.
Due to the doubling of exemptions for couples to $24,000 and $12,000 for individuals, some will benefit and many will not. It is a very complicated set of rules that you will discuss with your CPA, to see the actual impact on you as an individual and your family. There will now be seven tax brackets and the top rate will be reduced from 39.6 to 37 percent, helping the upper income end and also the Alternative Minimum Tax will be eliminated, again assisting the higher income individuals and families.
Also, the maximum amount that your estate will not be taxed on, will go from $6 million to $11 million; we all wish we could leave that kind of estate to our heirs, right?
Corporate tax rates will be drastically reduce from 35 percent to 21 percent.
One must read and try to understand the ramifications of the proposed new tax code to ascertain and determine its impact on homeownership.
Although deductions will be reduced on the middle to lower middle class (whatever is left of it), my belief for the long term is that homeownership should still be considered the best or at least the safest way to build one’s wealth, compared to other ways to save and multiply your money.
There are “doom and gloomers” among us that will say ownership will be reduced drastically, due to the less than beneficial position; but I would beg to differ.
Every individual has to sit down with their accountant and financial planner to see if this is true. It may be for some, but long term, is there a better and more secure place to put your money than your own primary residence? If there is, I would like someone to educate me.
Although demand may taper off and be lessened due to the new tax consequences, some out of fear and ignorance; I believe, interest rates maybe a larger contributor to the weakening of demand over the next few years.
Our rates are currently still at a 60 year lows and normal rates used to be 6-7 percent. There will be purchasers, who cannot keep up with the increase in prices, even if they increase by inflation of roughly 2.2 percent (as reported by the U.S. Labor Dept. from Jan. 1 thru Nov. 17).
Inflation from 1913-2013 averaged 3.22 percent, (inflationdate.com), so I believe buying your first home or move up dream home will still be a great vehicle to park your hard earned dollars.
Most important, if you are looking to move up to a luxury home this winter, there is an overabundant amount of them in NYC, as well as, homes in other areas in and around Long Island where prices have come down and are more negotiable right now, due to less of a demand.
So it is to your advantage to look and buy now, than procrastinating until next spring , when demand usually is greater, interest rates could even be higher.
Obviously, someone who has a higher than average income is still better
off buying now, especially investment property. Under current inflation, property values have doubled over 20 years or less.
This obviously can change, but if inflation were to kick in, the number of years would be much less! A number of years ago, property was doubling every 14 years, when inflation was much higher in the 1980’s.
Today it might take 24 years, depending if inflation stays somewhat constant, but no one can predict the future! Making money on your home is always evident as paper profits, depending on how long ago you purchased, but whatever profit you will derive, only comes about when you sell and reap the re-wards and cash in.
Don’t let the new tax law scare you from selling, investing or purchasing, because, unless you know of a better and safer place to put your money, let me know; and by all means, get out of your rental!
A home is where you live and raise a family and grow roots within your community or just live your life.
I have always instructed my children to buy real estate (and they have!), so when they retire, each property will be a 401K, that they can keep as a cash cow after their mortgage is paid off in the later years and then make a wise and calculated financial decision to sell or put in a trust for their children or whomever they will it to (and you can too!) and that will be a discussion for another article.
I hope all my readers, their families, significant others and friends had a Healthy,
Happy and Enjoyable Chanuka, Christmas or Kwanza or whatever you are celebrating and have a more Healthier, Happier and Prosperous 2018!
Holiday Bonus Information for our Readers:
If you would like to receive a digital copy to print of a “Sellers Guide, Things to Consider When Selling, Millennials & Buyers Guide to Purchasing a Home, see the links below and click or copy and paste into your browser:
http://www.simplifyingthemarket.com/en/sellers/?a=28598-a5c8d945f1821b690c117ac4508ba040
http://www.simplifyingthemarket.com/en/millennials/?a=28598-a5c8d945f1821b690c117ac4508ba040
http://www.simplifyingthemarket.com/en/buyers/?a=28598-a5c8d945f1821b690c117ac4508ba040
Phil is the owner of Turn Key Real Estate at 7 Bond St. in Great Neck. He can be reached by email: Phil@TurnkeyRealEstate.Com or by cell (516) 6474289 to answer any of your
questions. To search for any type of properties or to see what your home is worth or homes that have sold in your area, go to:: WWW.Li-RealEstate.Com
Or if you desire a Free, No Strings Attached customized
Comparative Market Analysis to see today’s market value, just call me for an appointment.
