- Home Seller Profit - It is important to note that there is NO change to this provision. If you live in your home for 2 out of the last 5 years, joint filers can deduct up to $500,000 tax free or single filers can deduct up to $250,000 tax free.
- Mortgage Deduction – Previously, if you had a mortgage of $1,000,000 you could deduct that amount from your taxes. This amount has been reduced to $750,000.
- Property Tax Deductions – Also known as SALT (State and Local Tax Deductions): There was previously no cap on this; now there will be a $10,000 cap on this deduction.
- Equity Line Deduction – Previously a homeowner could deduct $100,000 from their equity lines. This is no longer the case, as this deduction has been eliminated.
We may see a short-term halt from Buyers due to getting the facts around tax reform, but likely the momentum from 2017 will carry into 2018. Home Sellers continue to struggle with their next move and as high prices and competition make it extremely difficult to move up, Sellers are opting to stay put with a few moving out of the area. These new tax laws should have grandfather clauses for previous mortgages, which could further dis incentivize Sellers from moving. Low inventory levels will likely continue through this year and Buyer bidding wars will also continue, though hopefully at lower levels than last year to give Buyers a chance.