Want to Know What Tax Reform Looks Like for CA Homeowners? (Before the Senate Bill and Prior to Committee)
Here it is folks. . . straight from the President of the CA Association of Realtors:
(YOU DECIDE HOW THE NEW POTENTIAL RULES AFFECT FAMILY & QUALITY OF LIFE)
No doubt you know that yesterday Congress introduced a tax reform bill in the House.
Among the many provisions in the Tax Cut and Job Act that will impact real estate:
- Lowers the mortgage interest deduction cap from $1 million to $500,000 - A SMALLER NOR CAL FAMILY HOME IS AROUND 400K FOR A 3 BED 2 BATH HOME IN A QUALITY NEIGHBORHOOD. MORE SPACE NEEDS WILL DICTATE THE NEED FOR A LARGER HOME FOR PEOPLE WITH MORE KIDS OR MULTI-GENERATIONAL HOUSING REQUIREMENTS - SEE NEXT BLOG POST FOR A 430K EXAMPLE!
- Eliminates the mortgage interest deduction on second homes
- Homeowners would no longer be able to deduct the interest on home equity loans - HOME EQUITY LOANS ARE MANY TIMES USED TO MAKE LARGE REPAIRS AND DOING HOME IMPROVEMENTS LIKE A NEW ROOF OR DUAL PANE WINDOWS.
- Eliminates state and local income tax deductions - CA HOMEOWNERS PAY HIGH STATE TAXES ALREADY. THE INCOME LEVELS TO HAVE A DECENT QUALITY OF LIFE AND SUPPORT FAMILIES IS MUCH HIGHER HERE THAN OTHER PARTS OF THE COUNTRY.
- Caps property tax deductions at $10,000
- Extends the qualification period for exclusion of capital gains tax on the sale of a primary home from two out of the last five years to five out of the last eight years - THIS IS NOT GETTING MENTIONED MUCH, BUT THE FLEXIBILITY TO MOVE OUT OF A PARTICULAR AREA WITHOUT BEING TAXED AS IF ITS AN INVESTMENT PROPERTY IS IMPORTANT. MANY OF MY FIRST TIME BUYERS WANT TO UPGRADE TO BETTER, SAFER NEIGHBORHOODS BEFORE 5 YEARS. THIS REASONING ASSUMES MOST WANT TO STAY IN THEIR HOME FOR 5 YEARS BUT DISPROPORTIONATELY WILL AFFECT PEOPLE WITH LESS OPTIONS FINANCIALLY OR HAVE TO MOVE FOR FAMILY REASONS.
As you can imagine, these changes would remove the incentive for homeownership and unfairly hurt California homebuyers. California’s homeownership rate is already among the lowest in the nation, and we can’t afford for it to go lower.
Capping the mortgage interest deduction essentially nullifies the incentive for homeownership, thereby removing the incentive for people to buy homes. We all know that homeownership has and continues to be the best way for families to build wealth and move up the socioeconomic ladder. Congress has incentivized homeownership through the tax code for more than 100 years, and they should not change things now.
That’s why I’m asking you to get involved in C.A.R.’s and NAR’s Call for Action. Tell Congress to oppose this and any tax reform proposal that dramatically weakens the incentive for homeownership.
Share this Call to Action and use these hashtags on your social media accounts #SaveHomeOwnership and #TaxReform.
CALIFORNIA ASSOCIATION OF REALTORS®