New Property Tax Deduction Limit
The new tax bill passed on Dec. 22 limits the amount a taxpayer can deduct for property taxes plus state and local income taxes to a combined $10,000 - something Bay Area homeowners and home buyers should be aware of when calculating their property taxes into their monthly payment.
The new tax changes by themselves are not expected to impact home values in the same manner that low inventory and continued low mortgage interest rates typically do.
Homeowners who would normally be in the market to sell and trade up may decide to hold off selling. This would lower the inventory of homes, which typically drives up prices. Conversely, a continued strong market will only motivate a new crop of homeowners looking to downsize.
In addition to the cap on deductions noted above, the new law will end deductions for interest on home equity loans, unless the proceeds are used directly on home improvements, a shift that will influence homeowners looking to renovate their properties starting this year.
Bottom line: While some Bay Area homeowners may face a bump in their tax bill beginning this year, the value of Bay Area homes is expected to remain strong and buyer interest will continue to breathe life into our market.
This article provides generic information from third party sources about changes in the federal tax law which have not and will not be verified by Broker, who is not qualified to give tax advice. The applicability of that information to any given individual is unknown. If you have questions or concerns regarding legal or tax issues in general, or as it relates to your situation, you must consult with your own qualified California real estate attorney and/or tax advisor.